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ATM Operators Hit By Wave of Class Actions Regarding Fee Disclosures
The docket of the Minnesota federal court is fast filling up with class action lawsuits claiming that owners or operators of ATM's, including gas stations, restaurants, convenience stores, and others, are in violation of federal laws that require that ATMs provide TWO notices of any fees charged at the ATM: one, on the ATM screen during the transaction, and another physical sticker on the exterior of the machine. ATM operators can be liable for substantial penalties if customers use the device when either notice is missing. Based on this wave of litigation, we encourage our clients to check each of the ATMs on their premises and verify that each machine has both of the required notices. ATM owners or operators should also implement a regular inspection and maintenance program that will document compliance with the law.
The law has many exceptions and defenses, and liability will depend in large part on the contractual arrangements between the ATM owner and the company that services it.
Minnesota Tip Law Amended to Allow Credit Card Fee Sharing
Last year, we defended one of our restaurant clients that was sued in a class action for deducting credit card processing fees (pro rata) from the tip portion of customer tabs.
In fact, this practice was specifically authorized by a regulation (Rule 5200.0080) issued by the Minnesota Department of Labor & Industry (DOLI) until August 1, 2010, when the Minnesota Legislature repealed the regulation. After that point, it arguably became illegal to deduct the credit card fee from an employee's tips. The Legislature also repealed certain provisions regarding tips and the sharing of tips.
When Maslon investigated this, we found out that the DOLI did not actually intend to repeal the credit card portion of the regulation, or the tip sharing rules, only certain obsolete portions dealing with the long-abolished practice of crediting tips against the minimum wage.
These inadvertent changes have now been amended. Effective June 15, 2011, the Minnesota DOLI posted a revised Rule 5200.0080, that reinstates the provision regarding tips charged to credit cards, and the rules regarding tip sharing. Now, as before the repeal, where a tip is given by a customer through a credit or charge card, it is permissible to deduct from the tip the service fee charged by the card processing company, as long as the deduction is in the same ratio as the total fee charged by the credit or charge card company.
The Legislature also reinstated prior rules regarding tips and the sharing of tips, including rules providing that:
- Tip sharing must be purely voluntary and not a "condition of employment;"
- Tips may be shared among both direct and indirect service employees; and
- Customers must be provided "clear and conspicuous notice" if a "service charge" or similar charge is not considered by the employer to be a tip or gratuity.
View the full text of Rule 5200.0080.
We Can Help.
Contact a Maslon attorney if you have any questions about your compliance with these regulations and laws, or if you have been the target of such a suit.
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