Satisfied customers can be the result of service as well as the overall experience. Should employers be entitled to take part of the tips?
By Jeffrey R. Smith
Tips — they’re considered an important part of the income for restaurant servers, busboys and other workers in the service industry. The money these workers make from tips is a major reason why minimum wage standards in this sector are often lower than that in other industries. And it makes tips a vital source of income for those workers.
At some workplaces in the service sector, tips are pooled together and, at the end of a shift, divided up equally among the workers on duty during that shift. However, sometimes the employer gets its hand in the tip jar and takes a portion of the tip money. The justification is usually something like covering the cost of breakage of dishes or equipment by the workers over time.
But can employers legally do this? It’s illegal to deduct amounts from an employee’s wages without that employee’s approval — and sometimes even then it’s still frowned upon legally — to pay for losses from employee misconduct or mistakes. Is taking a portion of the tips tantamount to deducting from wages?
Employment standards legislation commonly doesn’t include tips as part of wages, so employers could be off the hook there — except for New Brunswick and Prince Edward Island, which have banned employers from skimming off tips.
But that could change, as more noise is being made about this practice being unfair, not to mention the risk of unfavourable public opinion that could result from the public becoming aware of a business following this practice. In Ontario, steps are being taken to make it illegal in that province for an employer to take a portion of employee tips.
If taking a part of an employee’s tips reduces that employee’s income to below minimum wage levels, it makes sense that it shouldn’t be happening. But if the employee is above the minimum, is it completely unacceptable?
Should the employer be allowed to find a way to recoup some costs due to employee error, or is it the cost of doing business? Since tips are variable and at the discretion of customers, should they be considered wages or just bonuses. Should the employer be entitled to any of the money if it’s contributed to the customer experience?
Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a buisness perspective. He can be reached at [email protected] or visit www.employmentlawtoday.com for more information.
