Article
Loose Lips Sink Shifts -- A Letter to the Staff About Discussing Their Compensation
Tipping in the U.S. has been controversial for years. At some restaurants, service employees can rake in substantial incomes, as kitchen staff work in hot high-pressure environments to put quality food in front of guests. The Department of Labor Fair Labor Standards Act allows tip pooling and tip sharing, but only among "employees who customarily and regularly receive tips."
Conflict between front- and back-of-the-house staff regarding income disparity is one of the reasons operators, including Danny Meyer, have tested a no-tipping policy in their restaurants with mixed results. Below is an actual de-identified letter from the owners to the staff of an upscale restaurant in the Midwest to address this problem, which might be all-too-familiar to you.
Tipping not only can foment resentment between front- and back-of-the house staff, but can create competition between service staff. Consider a situation in which bartenders gave first priority to drinks ordered by patrons dining in the bar to pad their tips, while guests seated in the dining area waited impatiently for theirs and complained to their servers.
The content below is from an actual memorandum distrib- uted to the staff of an upscale restaurant in the Midwest to rein in discord among staff regarding tipping. The owners prefaced their new ground rules with the following statement:
Active discussions are always good until they become negative. Arms waiving and lots of drama can be a sign those discussions have gone off track, particularly when they concern people's income and focus on what is fair, or not.
Most of the companies I have worked for had strict rules concerning the discussions of employee compensation. In fact, many had a rule that if you discussed your compensation with fellow employees you were suspended or even subject to losing your job.
Some may recall in [Restaurant] early days servers or bartenders, when they had a good night, would brag to other members of the staff about their good fortune. It became a real problem as the kitchen staff and server assistants making a third of the server and bartender income heard this litany of just how well the servers were doing as others sweated over cooking stoves and cleaned tables. Just not fair.
From there, the owners set forth their new policy:
So first, new rule. Anyone discussing their incomes with other [Restaurant] staff members will, for the first offense, be subject to a one-week suspension and on a second offense be asked to find employment elsewhere. I hope that is understood!
Now, on to the subject at hand: The compensation calculations for bartenders and server assistants. There have been some continually active, and loud, discussions on handling tips and what is fair, or not. I hope these discussions were not taking place in front of any of our guests. I also understand that the discussions have carried over into text messaging. That's a shame to move it into a semi-public forum. Seems some folks just can't keep their mouths shut even when they don't know, or understand, the changes taking place in an environment where hundreds of restaurants are closing in a pandemic. So be it.
As most of you know, there are no set ground rules for restaurant tips, and it seems about every restaurant pays differently. In the old days, very old in my case, I did work as a waiter and "bus boy" while attending college. The system then was to work hard for the servers you attended, and they would reward you at their discretion. It was an incentive system totally controlled by the server on what kind of job you did for them. Yes, some were very fair, the greedy ones never were.
Tips have evolved, for whatever reason, into basically one of two systems: payouts based on received tips, or a system of pooled tips based on sales. [Restaurant] is using the latter with an online software program, Tip Reports.
LEARN MORE... Tip Reports Tip Pooling & Scheduling Software for Restaurants and Other Hospitality Venues.
This system is very transparent with employee notations built-in for tracking. It also clarifies for tax authorities our standardized tip policies. In my opinion, tip allocations have been very fair, even generous, particularly where events are concerned. It is also true that [Restaurant] location and menu pricing offer the environment where larger dining checks allow for larger tips than many other restaurants. I think about everyone will agree.
Tips are certainly related to customer service. A number of complaints were popping up related to cocktails not being served in the dining room on a timely basis and at the same time I noticed several servers going behind the bar to mix their own guests drinks. The issue seemed to be, perhaps mistakenly, that the bartenders were busy serving their own tables, requested or not, which took them away from other bar duties. They, of course, earned much larger tips from their own tables.
The solution I thought was to raise the compensation of bartenders and restrict the number of tables they can serve. At the same time, I changed the percentage of tip pool compensation. For several reasons I now feel that did not work. Our bartenders work hard and are often called to do a lot of things including answering the phone, taking reservations, having to greet people at the door when the hostess is seating tables or we don't a hostess on a particular night. It is a tough job, no question. At the same time, it is not fair to overly charge the servers on the tip pool, particularly when the bar service has little to do with serving meals and bottled wine to dining room customers.
I have set up a new percentage allocation that will begin this week which should provide fair compensation to both bar and diner service team members. I will privately discuss the new system and its hourly and tip pool component. It should present a fair level of tip out compensation to everyone.
One more subject. If you are receiving cash tips, you are required by law to report them. That doesn't seem to be happening. The IRS (Internal Revenue Service) holds the restaurant responsible for non-filers, and I have noticed on the POS system that only one employee has ever filed a cash tip report. Can that be right?
We are putting together a nightly form that you will be required to fill out, sign and date. If the report is not filled out and accounted for your paycheck will be withheld until it is. This system will avoid any issues for [Restaurant] and allow for proper tax accounting. You will also need to check with a floor manager to sign your checkout as we have had a couple of situations where servers have checked out on their own and forgotten a service charge or other item. Simply good business practice to have two sets of eyes on checks.
That's it. Thank you for your great work and let's keep [Restaurant] open by providing the best possible service during these difficult times.
What Do You Think?
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