I know it’s bad, but I really can’t see why this is illegal - especially since they included additional funding to cover the employee’s expenses of processing the money.

If paying in pennies is illegal, then we should simply abolish the penny because it’s not with the time or effort.

The Coinage Act of 1965, specifically Section 31 U.S.C. 5103, states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts."

Now, private businesses can refuse to take cash before they render a service. But my understanding is that US tender must be accepted for all debts.