Ontario’s proposed reforms could make restaurateurs even angrier

John Tory’s proposed reforms will raise the wage to $14 – if employees have coverage. But the biggest impact may be on tips for restaurant servers If Ontario’s 10,000 restaurant servers raise a glass,…

Ontario’s proposed reforms could make restaurateurs even angrier

John Tory’s proposed reforms will raise the wage to $14 – if employees have coverage. But the biggest impact may be on tips for restaurant servers

If Ontario’s 10,000 restaurant servers raise a glass, it may well be a profit-sapping shout of outrage as they face cuts to their wages. Ontario’s Conservative government this week unveiled wage reforms that would reduce server hours, lower their “tip credit”, and raise their wages to $14.

A lower tip credit would make employees of all sorts, not just wait staff, contribute their share to helping restaurant owners cover costs for increased employee benefits, such as paid leave and promotion. With the labour bill’s addition of an “improved government safety” policy, requiring eateries to hire “personal protection officers” and staff minimum-wage inspections, many restaurant owners will finally find themselves paying costs they have only been posting-up against.

The move towards restaurant workers paying for healthcare via their gross wages, as of July 1, also comes with real implications for hospitality and food service staff, as an assortment of tips (and lower tips) take the better part of the larger employees’ take home pay. Whether that impact is positive or negative for the industry depends largely on the nature of the wage increases workers make.

The wage hike among Ontario’s lowest-paid workers could negatively impact the tips that servers are lucky enough to receive.

Some health care workers argue that, by paying healthcare directly, Ontario workers will earn more and take more home as a result. There are many municipalities across Canada that have successfully incorporated such healthcare initiatives into their local labour codes – Calgary, which instituted a healthcare premium this year, reports that employees are actually saving money. That will probably not be the case in Toronto, Ontario.

But even if Ontario’s restaurateurs were to put up their prices on brown bread sandwiches or bunnies at $4.35, the higher wages would still leave diners with less money in their pockets.

That leaves Toronto’s thousands of servers, who are more likely to rely on tips. That could have an impact on how much their tips are given. A low tip can come at the expense of a server’s wage, but a high tip can be the difference between a happy worker and a slightly unhappy one. Here in Canada, the two scenarios don’t always match up. In smaller American cities such as Pittsburgh, the ratio of low to high tip percentage is approximately the same, whereas in big US cities such as Los Angeles and New York, high tip percentages are no exception.

Toronto comes out with the win. It’s hard to imagine that the $2.25/hour wage cut will be any different than the $4.25/hour hike for servers.

What is still up in the air is how much of the workers’ added cost of healthcare will eat into tips, or contribute to higher tipping. To that end, I queried on Twitter a number of hospitality and restaurant industry insiders on the impact the changes will have on server tips. Here are their responses, with the responses in parentheses extracted.

Cat McMenamin, who helps run culinary seminars: “It is the same as the increase in minimum wage across the country. When you do that many tips and raises or hours the numbers will not be as good as the minimum wage increases.”

Terre Baltas, owner of Highland Ontario: “The standard wage will not change so tipping will stay the same. We will not put up our prices, although we will still hire 7+ members of management. I think the cause for concern lies in the 6-hour tip-cut. If we do offer reduced menus or high-priced menu items or our non-preferred servers will take less than full tips as this could have a negative impact on workers across the board – servers, baristas and (supervised) prep cooks.”

Shyam Sitaraman, owner of Windsor’s Bahama Mama Grille: “Tipping has not been affected by minimum wage because it’s based on personal productivity, not minimum wage. Tipping should have a slight impact because of (potential) reduced or given shorter hours, but the principle remains unchanged.”

Aaron Spahr, chef/owner of The Head and The Heart: “The tipping rate will not change in this bill, but any additional health-care costs for servers will likely push the

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