The Ontario Ministry of Labour updated its online guide to tips and other gratuities this past January, outlining the most current rights and obligations of servers and employers regarding tipping under the Employment Standards Act. The Liberals have introduced legislation intended to protect servers from unfair handling of tips by their employers — but is it enough?
On June 10, 2016, the Employment Standards Act was amended to prohibit employers from withholding, making deductions from, or forcing employees to return their tips and other gratuities. In effect, this made an employee's ability to keep tips and other gratuities an employment standard.
But some employers have found a loophole around this. A good example of this is illustrated in an article by Josh Dehaas for TVO, where it was mentioned that the Ottawa Convention Centre pockets 22 per cent of the 18 per cent service fee it imposes on its clients, rather than distributing the full amount to its servers. The convention centre says it's able to do this because it has classified its service fee as an "administrative charge" rather than as a full-fledged "gratuity."
By law, a tip or other gratuity is defined as a payment of a service fee imposed by an employer on a customer, with the reasonable assumption that the customer intends or assumes that the payment will be redistributed to an employee or employees. So, as long as the convention centre informs its clients that the only a portion of the 18 per cent "administrative charge" is actually considered a gratuity, it's technically not breaking any rules by taking a cut of that 18 per cent.
It's unfair that that companies can still take advantage of employees' tips by simply designating service fees under a different wording. Most servers are already paid at a lower minimum wage than the current standard ($12.20 an hour compared to $14 an hour) and the bulk of their earnings comes from tips, so they should be able to keep the full amount that they are being tipped.
Dehaas says its also difficult for servers to speak out on their employer's misdeeds since many of them don't pay taxes on their tip earnings. Employers can use that as leverage if their employees ever try to complain about the mismanaging of tips — they can simply silence their employees by threatening to report them for not paying their taxes in full.
That's why servers like Michael Vorobej, an employee of the Ottawa Convention Centre, are pushing for Ontario to adopt a legislation that requires all tips to be tracked and reported. Such is a similar system to Quebec's, which requires servers to report their tips weekly, and employers to make the necessary tax deductions. It may not seem like the most appealing system to servers, but it could lend them better protection against unfair employer practices.
For now, servers should make themselves fully aware of all their rights and obligations regarding tips and other gratuities in order to protect themselves. The most important to remember are: 1) employers cannot withhold, make deductions from, or force servers to return their tips, 2) employers cannot use servers' tips to cover things like spilled food or broken supplies, and 3) servers should take it upon themselves to track the tips they receive, including those from a tip pool.
Do you think Ontario force employers to track gratuities?