April 14, 2010

Tipping out trend a cause for concern

Do you work in a restaurant or a bar?

Do you tip out at the end of the night?

Does your tip out include a percentage that goes to the managers or "back into the restaurant"?

Well, according to the Toronto Star, it seems as though there's a growing trend that's squeezing the wages and of employees in the restaurant, catering, and entertainment industries - sectors that students of all ages typically flock to.

And that trend involves what the Star calls "tipping your boss".

In most restaurants, tips you give to a server or bartender are divided between the server and the other staff (e.g. kitchen and bus staff, hosts, etc.) at the end of the night. The industry calls this "tipping out".

But now, it seems as though tipping out to management - or to the restaurant - is becoming more common.

A tip-out to the business wasn’t common until a year ago. But when the economy slowed down, some restaurants introduced the concept. When the minimum wage rose from $9.50 to $10.25 about two weeks ago, some more restaurants started the practice.

Tip-outs to the house (restaurant) range from 1 to 5 per cent of gross sales and are explained as a fee for covering breakage or monetary error. Employers can’t deduct wages to cover broken dishes or credit-card mistakes, but tips are not wages legally. If the restaurant asks employees to give up 1 per cent or 10 per cent of their tips, it is legal.

The Star randomly phone a few restaurants in downtown Toronto, asked them about their tip policy, and came back with a mixed bag:

Sneaky Dee’s: Tips are pooled and divided between the servers, while 3 per cent goes to bartenders, 3 per cent to kitchen staff and 1 per cent to the doorman.

Terroni: A server said “everyone” shares tips, but didn’t specify whether that included the management.

Bistro 990: Tips are shared with bartenders and management. But a server said it wasn’t an issue and the management tip-out was more like an “account when things go wrong.”

Green Mango Thai Food: At this fast-food restaurant, tips are shared by counter and kitchen staff.

The Keg: Servers tip-out 4 per cent of the total sales to the rest of the staff, but not the management.

So why is this important?

Well as the Star correctly points out, a restaurant manager cannot reduce an employee's wage to cover for broken equipment (e.g. plates, glasses, etc.) or for payment errors. But there's ambiguity as to whether or not tipping out to the house violates that rule and if charging employees a percentage of their tips violates common employment law.

But more importantly, this story serves a great wake-up call and reminder for all employees to ensure that they are aware of their rights under employment standards legislation, such as Ontario's Employment Standards Act.

Most provinces have their own employment standards legislation - it's worth checking out and make sure you're always on top of any changes to it.

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