What’s Fair When Restaurants Share Tips?

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Photo by Kenny Eliason on Unsplash

In a recent protest walk-out by restaurant workers at Barrio, nine service staffers were fired for protesting an alleged lack of transparency regarding how management administered the tip pool intended to share with back-of-the-house workers.  Barrio is a part of the Heavy Restaurant Group (HRG) which includes local eateries Purple, Meet the Moon, Pablo y Pablo and Fiasco.

In the Seattle Times, HRG founder and CEO Larry Kurofsky defended a corporate 80/20 tip split policy by sharing his “vision” on the matter.  He believes the highest-paid employee in a restaurant should never make more than 2.5 times the lowest-paid employee, and that in many restaurants, the highest-paid employee is sometimes making five times what the lowest-paid employee does.  Noticeably absent in Mr. Kurofsky’s vision is the pay ratios of corporate employees (including the CEO) and restaurant staff.

Although small corporate entities by nature have much tighter margins than large ones, the average ratio of S&P 500 CEO pay to that of front-line workers, as tracked by the AFL-CIO, is 324 to 1.  Granted, this figure relates to larger corporate firms, but the point here is if Kurofsky really wants credit for being a visionary, then a transparent relationship between his pay and that of his front-line workers might give a better idea of how fairly everyone is being compensated.

Corporate equity and transparency are the core issues, since as servers’ “tipping out” the back line help is nothing new.  What is new is the method.  The old construct, when tipping was largely a cash affair, was for front-line servers and bartenders to “tip out” the hosts, food prep, and clean up crew directly.  This was done solely at the discretion of the server, leading to natural inconsistencies.  It also presented the picture of largely foreign-born back line workers relying on the largess of largely white front-line employees.  In recent times that model has fallen away, replaced by a centralized system that aspires to be more consistent, transparent, and equitable.  

This case doesn’t appear to be a reluctance on the part of front-line workers to help the back-line help.  More important is how much trust employees have in management’s compensation processes.  While there is no evidence of wrongdoing in the Times’ article, the employees interviewed do share a common frustration over how the process is administered.  A lack of transparency naturally leads to suspicions that management is skimming for one reason or another (a “service fee” for example). 

Then there is the larger issue of how poorly back-line workers are compensated. Clearly it is fair for front-line workers to share the earnings from their work since it would be impossible to do their work without the back line support.  Traditionally, servers receive tips based on the quality of their direct customer interface at “the front of the house.”  The “back of the house” workers have always been amongst the lowest paid.  A management “vision” that forces front-line workers to share tips with back-line staff may appear to be a thinly veiled attempt by management to make up for the paltry wages in the kitchen. (Chefs are considered management and not a part of this evaluation.)

The solution seems simple – show the workers the books.  Instill trust by extending a corporate “vision” to the compensation of all employees, including the CEO.  

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Writer and civic leader David Freiboth headed the King County Labor Council and oversaw labor relations at the Port of Seattle

5 COMMENTS

  1. Thank you David but the whole tipping system is a mess. The fact is, it is the only industry which relies on the general to pay workers because the employer won’t.

  2. Realizing that my comment is not on the topic of how tips should be handled, but feel more qualified than the writer to present what solutions are possible to keep a restaurant running smoothly. The waitstaff that held the 1 day boycott over not liking the 80/20 split, forgetting that there was a hiring acceptance, are thinking of themselves only.
    Maybe one of your distinguished group could write something that was not questioning the owner’s credibility pointing out the struggle that Seattle businesses have been through creating and maintaining jobs in the restaurant industry.

  3. Me too – this only opens the window wider, for a clearer view of what an awful, haphazard system this is for compensation of labor. We need to find a way out.

  4. Molly Moon, the very successful Seattle ice cream company, went tip free sometime ago. The company decided the tip idea is pretty corrupt (see their reasoning here: https://www.mollymoon.com/tipfree). Their model is based on paying a fair wage and abolishing tipping completely.

  5. Thanks for the tip – I mean, the link Molly Moon – very well put. The history made me curious, though, so I looked into that.

    And was pleased to see that Washington state was the first of several states to make tipping illegal, in 1909. It didn’t last long, possibly because of the financial stress on the hospitality sector of Prohibition in 1919.

    Also, a tip sharing arrangement is called a “tronc”, from French – but in France, waiters, and presumably the rest of the staff, are paid a living wage and don’t expect tips. In 2007, a government official in Spain blamed excessive tipping for inflation. And only in 2018 was the US Fair Labor Standards Act amended to allow tip pools to be shared with back of house cooks etc. Those factoids and more.

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