We Are at a Literal “Tipping Point.” Ontario is Prohibiting Restaurant Owners From Sharing in Gratuities

We are at a literal “tipping point.” Ontario is prohibiting restaurant owners and managers from sharing in tips that are meant for servers and other hospitality staff. Restaurant owners will no longer be allowed to take a cut of staff gratuities under provincial legislation that passed in December 2015. Liberal MPP Arthur Potts said his Private Member’s Bill 12 Bill 12, or the Protecting Employees’ Tips Act — an amendment to The Employment Standards Act, 2000 —must still be proclaimed into law, was designed to prevent employers from dipping into the restaurant employees gratuity pool.

The Protecting Employees' Tips Act, passed third reading, making it illegal to withhold their employees' gratuities. The plan was initially put forward three years ago by Michael Prue, an NDP MPP, who lost in the 2014 election and re-introduced by Arthur Potts, the Liberal MPP who defeated him.

The proposed legislation has been amended to allow employers to provisionally withhold gratuities if they reallocate them as part of an employee tip pool, a measure that allows some wage parity to front-of-the-house and lower-paid back of the house employees. Managers will not be allowed to participate in the pool unless they are sole proprietors or double as servers.  BL

Bill 12, Protecting Employees’ Tips Act, 2015

An Act to amend the Employment Standards Act, 2000 with respect to tips and other gratuities

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

1. The Employment Standards Act, 2000 is amended by adding the following Part:

Part v.1
employee tips and other gratuities

Definition

   14.1  (1)  Subject to subsection (2), in this Part,

“tip or other gratuity” means,

(a)  a payment voluntarily made to or left for an employee by a customer of the employee’s employer in such circumstances that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be kept by the employee or shared by the employee with other employees,

(b)  a payment voluntarily made to an employer by a customer in such circumstances that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employees,

(c)  a payment of a service charge or similar charge imposed by an employer on a customer in such circumstances that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employees, and

(d)  such other payments as may be prescribed.

Same

(2)  “Tip or other gratuity” does not include,

(a)  such payments as may be prescribed; and

(b)  such charges as may be prescribed relating to the method of payment used, or a prescribed portion of those charges.

Prohibition re tips or other gratuities

14.2  (1)  An employer shall not withhold tips or other gratuities from an employee, make a deduction from an employee’s tips or other gratuities or cause the employee to return or give his or her tips or other gratuities to the employer unless authorized to do so under this Part.

Enforcement

(2)  If an employer contravenes subsection (1), the amount withheld, deducted, returned or given is a debt owing to the employee and is enforceable under this Act as if it were wages owing to the employee.

Statute or court order

14.3  (1)  An employer may withhold or make a deduction from an employee’s tips or other gratuities or cause the employee to return or give them to the employer if a statute of Ontario or Canada or a court order authorizes it.

Exception

(2)  Subsection (1) does not apply if the statute or order requires the employer to remit the withheld, deducted, returned or given tips or other gratuities to a third person and the employer fails to do so.

Pooling of tips or other gratuities

14.4  (1)  An employer may withhold or make a deduction from an employee’s tips or other gratuities or cause the employee to return or give them to the employer if the employer collects and redistributes tips or other gratuities among some or all of the employer’s employees.

Exception

(2)  An employer shall not redistribute tips or other gratuities under subsection (1) to such employees as may be prescribed.

Employer, etc. not to share in tips or other gratuities

(3)  Subject to subsections (4) and (5), an employer or a director or shareholder of an employer may not share in tips or other gratuities redistributed under subsection (1).

Exception — sole proprietor, partner

(4)  An employer who is a sole proprietor or a partner in a partnership may share in tips or other gratuities redistributed under subsection (1) if he or she regularly performs to a substantial degree the same work performed by,

(a)  some or all of the employees who share in the redistribution; or

(b)  employees of other employers in the same industry who commonly receive or share tips or other gratuities.

Exception — director, shareholder

(5)  A director or shareholder of an employer may share in tips or other gratuities redistributed under subsection (1) if he or she regularly performs to a substantial degree the same work performed by,

(a)  some or all of the employees who share in the redistribution; or

(b)  employees of other employers in the same industry who commonly receive or share tips or other gratuities.

Transition — collective agreements

14.5  (1)  If a collective agreement that is in effect on the day section 1 of the Protecting Employees’ Tips Act, 2015 comes into force contains a provision that addresses the treatment of employee tips or other gratuities and there is a conflict between the provision of the collective agreement and this Part, the provision of the collective agreement prevails.

Same — expiry of agreement

(2)  Following the expiry of a collective agreement described in subsection (1), if the provision that addresses the treatment of employee tips or other gratuities remains in effect, subsection (1) continues to apply to that provision, with necessary modifications, until a new or renewal agreement comes into effect.

Same — renewed or new agreement

(3)  Subsection (1) does not apply to a collective agreement that is made or renewed on or after the day section 1 of the Protecting Employees’ Tips Act, 2015 comes into force.

Commencement

2. This Act comes into force on the day that is six months after the day it receives Royal Assent.

Short title

3. The short title of this Act is the Protecting Employees’ Tips Act, 2015.

This reprint of the Bill is marked to indicate the changes that were made in Committee.

The changes are indicated by underlines for new text and a strikethrough for deleted text.

______________

EXPLANATORY NOTE

The Bill amends the Employment Standards Act, 2000.  The new Part V.1 prohibits employers from withholding tips or other gratuities from employees, from making deductions from an employee’s tips or other gratuities, or from causing the employee to return or give his or her tips or other gratuities to the employer except as authorized under the new Part.