Price-fixing lawsuit wins class-action status

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I can’t like this.

I guess their mistake was agreeing on a number instead of just talking about what to do generally.

Stupid waste of time and money.

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gotta say,
i really wonder where the audits are that show
A)the income that the restaurants took from this surcharge
and
B) the ACTUAL HEALTH EXPENSES that they paid.

would love to see the AUDITIED “transparent” analysis of this charge restaurant by restaurant, quarter by quarter.
looks to me like these charges could well result in a baloney slush fund that may benefit the employees marginally, if at all, and might a vehicle to allow incoming funds to be kept separate from the restaurants’ taxable income.

since the health benefits are deductible, why not just include the charge in the prices so that it shows up as revenue? what is behind this weird complication?

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You could say that about any service charge.

There are at least two solid reasons for handling government mandates as surcharges:

  • The restaurant can exclude them from gross receipts and thus not have to pay a percentage to the landlord as required by most restaurant leases.
  • The restaurant’s listed prices will not be inflated over competitors who are subject to smaller mandates, or none.

Claiming a surcharge will be used for one thing and using it for something else can potentially lead to prosecution for consumer fraud.

Part of the issue is that some restaurants who decided to add the healthcare surcharge said on their menus something along the lines of “A 4% surcharge will be added to your check to assist with employee healthcare costs.”

Other places said “A 4% surcharge will be added to your check to assist with employee healthcare costs. Please let your server know if you would like this charged removed from your bill.”

Early on, most consumers did not realize the charge was optional, not mandatory, and paid it even though they may not have wanted to. Some restaurants implied it was a compulsory charge, when it wasn’t.

I’ve always wondered what happens in the months where they collect more on the 4% surcharge than the actual healthcare costs incurred. Not all employees have healthcare through their employer. If their healthcare costs for the month is $4,000, and they collect $4,500 from the surcharge, then what? I doubt they distribute the overage to the employees.

Legally, any surplus should be reserved for future health care expenses, and the percentage should be adjusted over time to avoid running a surplus.

That’s what they are supposed to do, but I’m curious as to what they do in actuality? It seems like the percentage amount has been the same for a couple years now.

I handle the benefits for our company. There have been years where we get a refund of our healthcare premiums because our costs were much less than the premiums paid (they use some formula to determine if you are refunded). When we are refunded, I have to calculate how much each employee on the plan is entitled to get back, because they paid a portion of the premium out of their paychecks. It’s a huge PITA, but we do it because it’s what we are supposed to do. I know other businesses might just say “screw it, we got a $3000 refund – let’s just keep it and call it a day.”

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Which all gets back to @westsidegal point that an audit could be most interesting…

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Monday morning quarterback says that the restaurant operators should have originally just raised menu prices (citing a general increase in cost of doing business) and done good privately by paying more for staff bennys. Now, there’s costly lawyers involved.

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Tangential but related: was looking at placing an online delivery order with a national pizza chain (had coupons - don’t judge me!) - when it came time to check out, not only did they tack on a delivery fee (which they carefully explained was not a tip for the driver and was $4.99), but there was an additional fee (I think it was maybe a dollar?), called a “Service fee,” to “Partially offset the increased cost of operations in California” (that’s a paraphrase). Ordered from a local place and was much happier.

I’m wondering if the service fee is in reference to the increase in the minimum wage and, if so, it’s showing up in other states.

Perhaps.

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A 3-4% surcharge probably doesn’t cover 100% of health care costs if the restaurant is legally obliged to cover most of its employees.

yes,
and i’m wondering who would be actively pursuing this sort of investigation,
especially in the current anti-consumer environment.

also, what MANDATE are you talking about?
these surcharges are NOT mandated.
these charges are imposed upon the consumers by the restaurants because they FEEL like it.
we have no evidence that the monies collected are actually going to fund healthcare for the actual boh staff.

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then, imho, they should RAISE their prices instead of using this version of financial slip sliding

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elsie:

any costs they incur as a result of the increase in the minimum wage are DEDUCTIBLE.

why would they install a surcharge that would sequester some of their revenue which would be offset by the deduction? why not just increase their prices and offset the resulting additional revenue with the deductible minimum wages like every other business?

looks strange to me in a bad way.

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robert:
there are a lot of assumptions in your statements.

still, why have they chosen this backdoor way to charge money?
why would they try to keep any of their revenue separated like that?
are they really applying it to an expense that is deductible for them?
if so, are they really showing the monies collected using these “surcharges” as part of their taxable income?

your argument that this is a perfectly fine way for them to get around their obligation to pay their landlords a percentage of the gross receipts suggests that their actual lease exempts such surcharges from their gross receipts. what are the odds of that?

the whole thing just looks sketchy to me.
i’m not playing.
won’t support it.

Taxes are only on net income. Landlords typically get a percentage of gross receipts.

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The ACA is a mandate. It imposes expenses on restaurants with 50 or more employees who work 30 hours or more but not on their competitors with fewer.

also, are they paying the healthcare with the surcharge money but DEDUCTING the healthcare costs from their normal revenue stream?