Government dragging feet on new tip sharing bill
What’s the holdup? Why isn’t the Ontario government moving ahead with Bill 144, Protecting Employees’ Tips Act 2010?
Alan Shanoff, Special to QMI Agency
Bill 144 is a private member’s bill introduced by Michael Prue late last year. It makes sense and should be passed. The bill contains one sentence: An employer shall not take any portion of an employee’s tips or other gratuities.
Here’s the background. Although tips are considered taxable income, they aren’t considered to be wages under Ontario’s employment standards laws. That allows any restaurant employer to impose any rules, arbitrary or unfair as they may be. Some employers require servers to share their tips with other staff. Sharing tips with support staff who don’t generate tips can be fair. But some employers force their servers to share their tips with managers or the house — and that isn’t fair.
There’s no justification for any server to have to share tips with either the manager or the owner. Managers receive more than minimum wage and often share in bonuses based on results of the restaurant. Owners set the prices and receive the profits. Why should they share in any tips? Some owners try to justify taking a cut of the tips by arguing the money covers such things as theft and breakage. Others use it to defray credit card fees. But those and other related expenses are part of the business’ overhead.
Also, an employer isn’t allowed to deduct the cost of theft or breakage from an employee’s salary. Justifying a sharing of tips with owners to cover theft or breakage is just a sneaky way of skirting the law and allows employers to do indirectly what they can’t do directly.
Cheap tippers are a real problem for servers forced to share tips. Often the sharing is based on a percentage of sales. Servers who don’t receive adequate tips can see their already low tips reduced where sharing is based on a percentage of sales.
Tips are considered to be taxable income. If Canada Revenue Agency believes a server isn’t being truthful in declaring tips they have the power to estimate what they believe the server should have declared and require him to pay additional income tax. But the server may have declared less tip income due to tip sharing.
New York is decades ahead of us in this area. As of 1968, employers were forbidden from sharing in servers’ tips. Last year, new regulations were passed defining the job categories that are eligible to share in tips. Employers are required to maintain records of tip pools and how the money is distributed. Owners who break the rules and misappropriate tips can be ordered to repay servers going back for up to six years.
We require restaurants to post their latest food safety colour-code risk based on their last health inspection results. Why don’t we also require restaurants to post their tip sharing policies either on a window, in the menu or on-line? I wouldn’t give my business to any restaurant where tips are shared with either the manager or owner.
If New York was able to deal with the problem in 1968 surely we can deal with it in 2011.
— Alan Shanoff was counsel to Sun Media for 16 years and is currently a freelance writer and teacher.