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Should tips ever go to the house?

3 min read

Restaurant and Foodservice

Recent cases surrounding the issue of tip sharing at U.S. restaurants have centered on questions such as whether back-of-the-house workers who don’t interact with patrons should share in gratuities. In Canada, there’s a bigger issue up for debate — whether restaurant owners are entitled to part of the tip.

Servers in the U.S. often take the issue to court when their bosses dip a hand into the tip jar. In Canada, they’re legally allowed to take a portion of gratuities as part of their compensation, and a debate has been raging in recent weeks over the question of whether the law needs to be changed.

The New Democratic Party is arguing in favor of changing the law to make it illegal for bar and restaurant owners to take part of the tip that patrons leave for servers and bartenders, most of whom make a minimum wage of CA$8.90 per hour, plus tips, media outlets including CBC News reported. “For a manager to come along and take that tip, even a percentage of it, is totally wrong, because the tip was not intended for management,” said Member of Parliament Michael Prue, who introduced a bill to change the law.

Labor Minister Linda Jeffrey opposes the bill and says tip-sharing arrangements with owners are OK, as long as they’re clearly defined from the beginning, and good servers who don’t like the arrangements can always work elsewhere. Meanwhile, John Couse, president of the Ontario Restaurant and Bar Association, says the practice is rare. “I haven’t run across it in my career, and I’ve been in the business for 30 or 40 years. It’s not all that common, so I’m not sure it’s a pressing issue that needs legislation.”

While Canada’s tipped minimum wage might seem generous next to the $2.13 per hour for U.S. servers set by the federal government in 1991, laws make it clear that the tipped-wage rate stands only if servers make enough in tips to make up the difference between the tipped minimum and the actual minimum wage, as The Huffington Post explained in a story about restaurant servers struggling to make it on wages that haven’t kept up with the cost of living.

Stagnant wages are one thing, but U.S. laws give servers recourse when they believe their bosses are withholding tips, as evidenced by a $5.25 million settlement of a class-action lawsuit against celebrity chef and restaurateur Mario Batali. In that case, which was settled in March, servers and other employees at Batali’s restaurants said it was common practice for the house to withhold a percentage of tips to boost profit, according to The New York Times.

Do restaurants ever have a good reason for sharing in tips? Tell us in the comments.