Hands off our tips!

An example of "house and management" tip outs prior to June 2016
An example of “house and management” tip outs prior to June 2016

By Lydia Dobson

The minimum wage increase across Ontario has sparked a series of reactionary cutbacks from bosses. One of the many ways that employers have managed to download the cost of the minimum wage increase onto the backs of workers is through tip pools.

Last week, a public debate took place in Ottawa where the owner of Clocktower Brew Pub asserted his right to take a higher percentage of servers’ tips using this process. Around the same time, a server was fired from her job at the Ottawa Sunset Grill for speaking out on the topic. Restaurant workers in other Ottawa establishments have reported having the amount of tips they contribute to tip pools being raised by 0.5% to 3%.  

Not only are servers being penalized for the minimum wage increase, they are also being scrutinized by some in the public as undeserving of the same tip percentages because of it! So we now have a situation where bosses are taking more tips and customers are contemplating tipping less. As someone who has worked as a server for more than 10 years, it’s frustrating to watch these debates unfold.  

Things to understand about tip pools:

  1. Tip pools are based on percentages of sales, not tips earned. This means that all recipients of the tip pool are guaranteed their percentage cut EXCEPT for the server, who is the one earning a lesser minimum wage because of tipping. So while this has always been an issue for servers, the problem becomes exacerbated when tip pool amounts are increased and tips from customers could be decreasing.  
  2. There is no law capping tip pool amounts. This puts servers, whose earnings are already vulnerable based a customers’ whim, in an incredibly unstable position.  
  3. Tip pools are a cash-based system with very little formal tracking. Tip pool amounts are generally collected from servers at the end of each shift, with totals jotted down on receipt paper and submitted in a ‘cash-out’. A manager or owner will then hand out envelopes to the kitchen staff with little more than a handwritten number on it indicating the total amount in the envelope every week or so. Generally speaking, the breakdown of their calculations and total tips from servers is not provided.
  4. The laws do not give servers any right to oversee the governance of tip poolsLegally, servers have no right to participate in the administration of tip pools. After having their tips collected by the bosses for the tip pool, no accountability mechanisms are required.

The lack of legal oversight of tip pools allows employers to manipulate the system, which is intended to facilitate equality. This makes servers’ already precarious earnings more vulnerable.

What makes this loophole in the restaurant industry so offensive is the years of advocacy work that went into amending the Employment Standards Act to include language that specifically prevents employers from directly withholding tips from servers. Prior to June 2016, restaurant owners legally could and did take tips from employees for things like lost cutlery or walk-outs. Many places also implemented a ‘house tip out’, which forced serving staff to give a percentage of sales back to the owners.

While practices like ‘house tip outs’ and walk-out funds have largely been eradicated from the industry, the Protecting Employees Tips Act still allows for tip pooling to continue with little oversight or protections for servers.  

This lack of regulation over tip pools is what many employers are taking advantage of in order to punish workers for their recently won minimum wage increase and deny servers fair wages.

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