Surcharges which pose as taxes or claim to go towards wages could be effectively eliminated
There no law called the "Seattle Fair Wage Act" requiring such a charge, it's certainly not a tax so the sales tax is not an "other tax", and it is not allowed for surcharges to count towards an employee's hourly minimum wage.
Misleading minimum wage surcharges could soon be a thing of the past. Working Washington has sent an official request to the State Department of Labor & Industries calling on the agency to establish rules which would effectively eliminate misleading surcharges which pose as taxes or claim to go towards wages.
Based on dozens of reports from members across the state and the clear language of Initiative 1433, Working Washington is calling on L&I to exercise its authority to clarify and enforce rules that ensure:
- Service charges can never pose as taxes or government-mandated fees.
- Any surcharges that include the word "wage" or similar language are forbidden, because they will invariably be interpreted as intended to count towards employees’ wages, and that would be illegal under state law.
- Workers must be made whole for service charges which inappropriately were counted towards wage obligations, as this is effectively wage theft.
Sip at the Wine Bar and Restaurant in Issaquah claims their 3% add-on is a surcharge for a government mandate.
These requests are based on the clear language of Initiative 1433, which passed overwhelmingly in November 2016 and, in addition to raising the minimum wage and establishing paid sick time statewide, also provides that:
“Tips and service charges paid to an employee are in addition to, and may not count towards, the employee's hourly minimum wage.”
Despite this unambiguous language, for more than a year, Working Washington members have documented misleading surcharges at dozens of businesses across the state which claim to go towards wages, or attempt to pose as taxes. Neither of these are allowable.
Now that a formal request has been submitted, Working Washington members look forward to hearing from L&I in the weeks ahead as they establish rules to enforce the law in this area.
The complete Working Washington Letter to L&I is available online here.
More information:
No matter what Waddell's Pub in Spokane says, there is no such thing as a "WA Min Wage Fee."
Itemized surcharges attributed to the cost of the minimum wage are objectionable because paying the minimum wage is a basic cost of doing business, not an extra add-on to be counted separately. If there’s no line item for the electrical bill, no napkin-laundering charge called out, and no special fee levied because a few employees had to work overtime last pay period, then there’s no good reason to tack on an extra 2% and attribute it to the minimum wage
If you run a business, your prices reflect your total costs, of course — from the cost of rent to the cost of a cleaning service and everything in between — but each cost isn't itemized on the receipt. So when a business adds a surcharge and attributes it to the minimum wage, they're making a political statement that seems to be about publicly begrudging having to pay a higher wage. It’s probably no coincidence that some of the businesses adding these new fees have also fought against raising labor standards. And it’s also a violation of the clear language of Washington State law.
Examples of misleading surcharges reported by Working Washington members:
