Councilman Kenney’s WMD Moment

Just before the Thanksgiving break, City Council voted 14 to 2 in favor of Bill No. 110341, a measure that Councilman Jim Kenney introduced in the spring to stop restaurateurs from deducting credit card fees from servers’ tips. Back in May, he told KYW’s Mike Dunn that he was aware of several restaurants in the city that were making servers pay the entire fee—not just the percentage associated with their tips—and his office confirmed this for me at that time. It must have been easy for Kenney to drum up support for the bill with accusations of such Scrooge-like behavior. But he wouldn’t name names. And now I know why.

In case you aren’t aware, whenever you use a credit card to pay at a restaurant (or any other business, for that matter), the credit card company charges the restaurant a fee based on a percentage of the bill. This percentage varies by company, but tops out at four percent with Amex. So if you leave a $20 tip on a $100 check at Osteria and pay with the Platinum, American Express turns around and charges the restaurant $4.80. Multiply that out by thousands of $100 dinners and take into account the fact that the vast majority of people pay by credit card in restaurants, and these fees can really add up.

Many restaurants, including those owned by Stephen Starr and Marc Vetri, make servers pay their share of the fees. So in the same scenario as above, the server pays 80 cents (or 4 percent of $20). It’s a common but controversial practice, as evidenced by the comments on my interview with Vetri earlier this week, but there are pretty sensible arguments on each side (as well as a hefty dose of anonymous Internet vitriol, naturally).

The one thing that everyone seems to agree on, and rightfully so, is that a restaurant should not make the server cover the entire fee. But that’s exactly the bad behavior that Kenney used to gain momentum for his cause. Taking 80 cents out of $20 is one thing. But $4.80? That’s flat out wrong.

Now that the bill has passed through Council and is awaiting Mayor Nutter’s signature (he’s expected to sign), I decided to give Kenney a call to see if he was ready to name names and call out these evildoers. Sarah Sachdev, Kenney’s director of legislative affairs, said, “To tell you the truth, I think that the councilman got a little bit of misinformation there. We did try to ascertain this and learned that it wasn’t the case.”

So, basically, Kenney “got” misinformation, based legislation on that misinformation, and then sailed the misinformation-based legislation through City Council. And so it sounds like Vetri hit the nail on the head when he told me,”They’re doing it without doing any sort of due diligence whatsoever.”

UPDATE: City Hall spokesman Mark McDonald called to report that Mayor Nutter has, in fact, signed Bill No. 110341.