Tipping is a complex practice, but for many in the service industry, it’s a necessity. In coffee shops, those few extra dollars an hour can be the difference between making ends meet. Lately, Dark Horse Coffee BarA nine-location Toronto coffee shop chain has introduced a recent tip-sharing policy that has sparked controversy and reignited debate over how tips should be divided among employees.
As reported Daily Beehivethe recent policy was made public via anonymous post on Reddit by a user posing as an employee of Gloomy Horse. In it, they claim that, starting in behind schedule April of this year, the company took a combined 17% of tips from baristas and front-of-house staff and “passed them on to bakers, management, front desk and logistics staff… all of whom are either salaried employees or earn significantly more than baristas who start at minimum wage.”
The poster goes on to say that “due to the overwhelming response,” management has raised wages by $0.75/hour, but that this amount “does not in any way” cover the amount lost in tip share and will be “neutralized when the minimum wage increases to $17.20 in October 2024.” They claim they are losing about $200-400 per month in tip share.
The post also claims that Gloomy Horse will fire anyone who opposes the policy, stating that “employee contracts state that employees will be required to pay compensation for ‘reputational damage or loss the company suffers due to derogatory remarks.’”
In a statement to the City of Toronto blogTOGloomy Horse confirms the recent tip-sharing policy, as well as the 17% allocation allegedly provided by an anonymous Reddit user. The total allocation is divided as follows: 83% for guest service (baristas, assistant managers, and store managers), 9% for internal production staff (roasting and bakery teams), 4% for delivery staff, 2% for store management, and 2% for “support staff who assist with day-to-day store operations, including ordering, fulfillment, hiring, and technology.”
“We believe that everyone involved in serving our customers should be involved in our tip pool,” the statement reads. “The policy was implemented in consultation with our team and is consistent with employment standards regarding tip pool sharing. Additionally, we have increased the base rate for all of our hourly employees to mitigate most of the impact of this change on them.”
The statement also says no employees were reprimanded or fired because of the policy change.
Tip-sharing has been a common practice in the service industry for years. Traditionally, the allocated tips were given to other customer service employees who make the servers’ jobs easier, such as busboys, dishwashers, food delivery people and even hosts. But the nebulous term has allowed for tips to be spread wider and thinner, often as a way for employers to keep the bill as low as possible.
Should bakers and roasters get a cut of a barista’s tips? Technically, a barista wouldn’t be able to do their job without coffee or food. They also wouldn’t be able to do their job without a coffee machine technician, so should they get a cut? Gloomy Horse Espresso seems to think so, by its own admission, allocating tips to delivery drivers, store management (separate from assistant managers and store managers, who get an 83% cut), ordering, fulfillment, hiring, and technology.
This is where the complications with tips come in. Companies can ask for estimated hourly tip amounts as part of the pay package when they’re hiring, but it’s not legally binding. They have every right to change where those tips go. (Technically, it’s illegal to have managers and above in the tip pool, though in Canada there is an exception (“an employer’s manager, director or shareholder may share gratuity if he or she performs ‘substantially’ the same work as some of the employees,” and you can see how this grey area allows employers to circumvent the law.)
For better or worse, tipping doesn’t seem to be going away anytime soon. And neither does tip-sharing. But the question remains: Where is the line? Who should be part of the tip pool and who shouldn’t? There seem to be some obvious “no’s” and a fairly huge gray area. But like anything that’s unchecked, the gray area starts bleeding into the obvious “no’s,” until they, too, perhaps due to nefarious pay practices, are now in the gray area. And the ones left holding the bag are the customer service workers, the baristas, who are dependent on — perhaps even promised — money that is no longer theirs.
