Tip skimming is illegal
It would appear that despite legislation being passed years ago prohibiting restaurant owners from stealing employees’ tips, many cannot resist the temptation.
The Employment Standards Act states that “an employer shall not withhold tips or other gratuities from an employee, make a deduction from an employee’s tips or other gratuities or cause the employee to return or give his or her tips or other gratuities to the employer unless authorized to do so under this part.”
The employer is allowed to create a tip pool and force servers to share tips among other employees. The act does not set out the requirements of a tip pool or what other employees should be included. Tip pools often include bartenders, busing staff and kitchen staff as well as hosts. There is no requirement that that take place. Except under certain circumstance, an owner, whether it be a corporation or an individual, can never participate in the tip pool. They are not an employee. That also applies to directors and shareholders.
There is an exception for owners or shareholders who do the same work, on a regular basis, as those who receive tips. An owner who works as a bartender in their establishment does not have to give their tips away to everybody else.
That does not mean an owner can work one evening a month at the bar and share in every night’s tip pool. They must do that hands-on work to a “substantial degree,” which means they routinely and predictably do the work and it takes up a considerable amount of their time. Also excluded would be the restaurant owner who only bartends, serves, buses or cooks for a short time each day when there is a rush.
At the end of the day, the rules are pretty clear. If the serving staff all get to keep their tips and don’t share with kitchen staff, an owner who works a lot of the time in the kitchen can’t suddenly decide that they, alone among the kitchen staff, get to share in part of the tips. If they have set up a tip pool where the other kitchen staff get a share, then the owner can participate, unless their contribution is marginal.
Reports indicate that tipping, especially since the pandemic, has grown in frequency and amount. There is no doubt restaurant owners have suffered significantly as a result of the pandemic and were put under real and distressing financial pressure. But the law is the law. Restaurant owners have to look to their business practices, pricing and costs to take care of their profits. They cannot look to the tips that are intended by the customer for the staff who deliver the service.
It is not like everyone is not aware of this legislation. Some have tried to be crafty and designed ways around it. One server told me that every time she is assigned a table she is charged a fee that is a percentage of the bill generated, whether they tip or not. If challenged, the owner would probably say they are not taking part of their tips, they are just charging a fee for being given a table and an opportunity to earn a tip. I believe the Ministry of Labour would reject that spurious explanation in seconds flat.
I have heard of other owners simply ignoring the legislation and keeping some of the tip pool for the “house.” I have been surprised when I heard these stories that people simply didn’t file a complaint with the Ministry of Labour. People are afraid of losing their jobs. The Ministry of Labour accepts anonymous complaints. They would go into the establishment and do an audit and never disclose who filed the complaint. If the employer is found to have contravened the legislation, the amount kept for themselves would be charged against the employer and redistributed to the people who should have got the tips, whatever the tipping distribution was among staff. That would be an expensive lesson. It is unfortunate that more servers do not quietly use that option. Posting this article quietly in a staff work area might be a start.
This article was originally published by The Hamilton Spectator.
