Category: Finance

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Restaurant workers demand tip protection

By Barry Rueger
Published: The Media Co-op
May 29, 2024
1205 words

Tens of thousands of servers in restaurants and cafés across Canada rely on tips to survive. Restaurant front-of-house staff are almost always paid minimum wage, and the extra 15 to 20 per cent can mean the difference between paying the rent or skimping on groceries.

In an age of debit and credit cards, tipping your server almost always means tapping your card on a Stripe or Interac terminal. It’s fast and easy, and you don’t have to do mental math to figure out the tip amount. One question remains, though: do you know if your cheerful server will actually see any of that money?

The Halifax Workers’ Action Centre has made tips a focus of their work, with questionnaires and outreach to try and determine how widespread the problem of tip theft might be. “Tip theft” refers to when an employer refuses to let servers keep their tip income, sometimes by insisting that it be split with kitchen and other staff, but even worse by simply taking all of that money for themselves.

Halifax WAC organizer Syd Blum describes the challenges faced by ordinary restaurant employees. “Workers have a very difficult time accessing justice because the cost of lawyers is prohibitive. Nova Scotia is one of the very few provinces in Canada that doesn’t classify tips as wages. So workers are really in that tricky middle ground where, at the federal level, tips are considered income, but provincially they’re not protected, like wages are.”

The WAC surveyed restaurant workers in Halifax, and of more than 250 responses, nearly three-quarters had experienced some form of tip theft. According to Blum, “whether they were currently having their tips stolen, had previously worked somewhere where tips were stolen, or knew someone who was experiencing tip theft — it was widespread. And we cast a wide net, we didn’t just seek out people with experience in tip theft.”

When diners left tips in cash this was less of an issue. Now that almost all tips go through the restaurant’s electronic payment systems, it’s often the case that servers can’t even be sure what their customers left for them as tips.

Halifax WAC warns servers that employers may not pass-on all tips from Point-Of-Sale (POS) machines, or that tip-pooling with kitchen and other staff might quietly include a cut for the bosses. Other employers deduct credit card fees from tips.

One former Nova Scotia restaurant worker, Pers Turner, recalls a major food service company that owned restaurants and did catering menus, but refused to pay catering employees tips, even though they were added to client bills at the end of the day.

“For their catering staff, they did take all of the tips, and their justification was that they paid their catering staff more,” Turner says. “The bills for catering had the customers paying a gratuity, but all of that money went to the company.”

Denying tip protection

In November of 2023, that dilemma led Nova Scotia NDP MLA Kendra Coombes to introduce Bill 366, the Tip and Gratuity Theft Prevention Act. Modelled after similar Acts in other provinces, it would have protected workers’ tips from greedy employers.

A year and a half later, Nova Scotia’s Conservative government has decided not to move ahead with tip protection. Their argument, common among those who dismiss tip protection, is that “in Nova Scotia, tips are not considered wages and the Labour Standards Code does not address tip protection.”

Currently, six Canadian provinces have legislation protecting workers’ tip income. The three prairie provinces, Nova Scotia and the three northern territories do not. Most employers are happy to pass on tips to the servers who earn them, but I spent several hours scouring provincial Reddit groups across Canada, and examples appeared everywhere. The amounts lost are often relatively small, and servers are generally making close to minimum wage.

Blum says because the costs of launching legal action against an employer are often unaffordable, these thefts are just accepted as part of the job.

“The Halifax WAC exists because the cost of hiring a lawyer is prohibitive to most people — especially those making service industry wages,” she says. “We get a lot of people who were turned away from employment lawyers’ offices because they’re told the value of their claim would be far outweighed by legal fees and it’s just not worth it.”

The Canadian Revenue Agency has taken tips much more seriously. For decades, they have been known to audit restaurants to tally servers’ tips and assess whether income taxes have been paid on them. Now the CRA website is explicit in how the employer needs to track tips: “If any of your tips and gratuities are controlled by your employer, your tip income amount should already be included on your T4 slip.”

Despite Nova Scotia’s claim that tips aren’t wages, the CRA says that “in Canada, the amount you earn in tips and gratuities is considered to be income, and you must report all of it on your tax return.”

In other words, Nova Scotia will expect your server to pay provincial income tax on tip income, even though the province refuses to protect that income from employer theft.

Manitoba, which had been under Progressive Conservative rule for seven and a half years, took things one step further. The Employment Standards: An Adult EAL Curriculum Resource, a program designed to introduce Employment Standards concepts to newcomers while developing English as a second language, teaches students that, “Legally … the server’s tips belong to the employer, so the employer can take money from the server’s tips.”

Despite the 2023 election of the NDP’s Wabanakwut “Wab” Kinew, that remains provincial policy. In an email statement to The Media Co-op, Robyn Dryden, a policy analyst in the Department of Labour and Immigration, says: “The Employment Standards Code defines ‘wages’ as ‘compensation for work performed that is paid to an employee by his or her employer…’ [as] tips are paid by the customer rather than the employer, and are considered to be similar to a bonus rather than a wage.”

Helping servers directly

If you eat in restaurants on the prairies, or in Nova Scotia, you may need to take steps to ensure that your server receives the tips that you leave. One option is to return to carrying cash for tips, and leaving — or handing to them discreetly — a $10 or $20 bill at the end of dinner.

Alternatively, you can ask your server: “If I leave a tip on the terminal, who gets that money? Is it you?”

Blum encourages talking “to workers about this, especially as customers.”

“It’s one thing if an organizer comes in and starts talking about tip theft, but it’s another thing if people who are in the shop every day buying coffee or eating breakfast are having those conversations. We really encourage that,” she says.

For tips to be protected province-wide — something workers have been calling for — Blum says all it takes is a little political will.

“What’s wild about tip theft in Nova Scotia is that we’re not asking the government to create some kind of new program. We’re talking about a line on a piece of paper. It’s an amendment to legislation, so it would cost the government nothing.”

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How to save a bundle on rental car insurance and make sure you are covered

By Barry Rueger
Published: Globe and Mail
March 8, 2024
1065 words
Downloadable PDF

After landing at an airport, many of us will proceed to collect our luggage and head to the car rental counter. It is there that they will invariably offer to sell you insurance.

I’ve been in this same situation countless times, but after a recent trip to Vancouver where the price of the insurance offered was more than the price to rent the car, I decided to do some digging to find out the smartest options.

Every rental will include basic liability coverage. It’s required by provincial law. But some kind of additional insurance to pay for damage to the car is a good idea. The cost to repair even small dings or a cracked windshield can quickly run into the thousands of dollars.

Accepting the offer at the counter is usually a very expensive way to get that insurance.

We recently rented a car in Vancouver from Hertz. When we made the booking on Expedia, the site offered insurance for nearly half of the price that we were going to pay for the car rental. We declined Expedia’s offer and assumed we would do better at the Hertz counter.

We were wrong. For a two-week rental of a mid-sized car, Hertz was charging us $380.72. The “loss damage waiver” it offered, covering physical damage to the car, as well as theft or vandalism, but not injuries, would have cost an additional $489.86.

We declined.

What I have learned is to plan ahead.

There are choices out there, but the time to research them is well before you book the car, not at the rental desk.

Almost every insurance option requires that you already be a customer, whether it’s your own auto insurance company, the credit card you use, or the website that you use to make travel bookings.

In our case, it turned out that Expedia would have been a better option than Hertz. If we had purchased rental insurance through Expedia, we could have bought a “travel insurance policy” for the same two-week rental for $241.80 – that’s $16.12 a day, or slightly less than half of what Hertz wanted to charge us. Even more amazing: The Expedia package includes not just collision coverage, but trip cancellation coverage, and will pay some emergency medical expenses.

If you don’t use Expedia (or similar booking websites), those rates are similar to another option called RentalCover.com, a standalone rental car insurance site that will set up your insurance prior to picking up the car. Unlike some car rental insurance policies, RentalCover will insure all drivers listed on the rental agreement as well as fees for loss of use and towing, and they’ll cover trips of more than 30 days. They’ll also cover you if you’re renting a motorhome or recreational vehicle.

In this case, while still at the rental counter, we chose to call the insurer who provides our car insurance in Nova Scotia. Our agent added rental car coverage to our existing auto policy, and assured us that we were now fully covered for an annual fee of $32 a year. That quick call saved us hundreds of dollars.

The other insurance option that is often available is though your credit card. Most major credit cards offer some form of rental car insurance as part of their package of benefits. Call your card company or visit their website ahead of time to make sure your specific card package includes this coverage.

As you’re doing this research, be sure to ask some careful questions. For instance, if you decide to accept insurance coverage from the rental company, will you still be covered by an outside insurance policy? It’s generally an either/or proposition. And you should be clear that the auto rental company might require the cardholder to pay for damages with their credit card, with your card company reimbursing you after the claim is processed.

In other words, you might find your credit card maxed out.

Beyond that, rental insurance plans all have various rules. Most companies have age restrictions. Expedia, for instance, excludes drivers under 25 years of age, or over 70. Some insurance packages exclude camper vans and the like. All of them insist that you stay on paved roads and obey rules about drinking and driving.

Before booking your rental car, look carefully to make sure that your credit card insurance includes your entire planned trip – especially if you’re travelling to more than one country – and the specific vehicle type that you hope to drive.

And if there will be more than one driver, always ask if both you and your partner are covered. Some rental car insurance packages will charge double for a second driver.

If you damage your rental car, understand that using outside insurance may leave you faced with paying the entire cost of repairs before you can claim it from your own insurance company. Hertz, for instance, is specific that if you “choose to decline Hertz’s coverage, you will be responsible to Hertz for the full value of any damage due to loss of or damage to the Hertz vehicle. If loss does occur, you must then submit a claim for reimbursement to your credit card company.”

In recent years, we’ve had to negotiate claims with both car rental companies and the company that moved our household. We’ve learned that it’s worth taking the time to document anything that might come back to haunt you. Even though you’ll be anxious to get on the road, find a well-lit spot to stop, examine the car for existing damage and take photos. If you see any sort of dings, dents or scratches, call the rental office and tell them.

And if you bring the car back, and the rental agent suddenly demand hundreds or thousands of dollars to repair damage? Always be reasonable, but never feel a rental agent’s assessment is the final word.

People make mistakes, and they especially make mistakes when examining a dirty car in a dark, underground garage. Insist that they show you exactly what they think needs repair. If you don’t believe that you caused the damage, or that the damage merits a claim, say so.

I love rental cars and the chance to drive a new make and model of car every time that I travel. Now that I understand how to manage my insurance, I’m sure my next trip will be that much more relaxing.

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What do you do with a small inheritance?

By Barry Rueger
Published: Globe and Mail 
October 7, 2022
1140 words

When my mother died last year her estate was small: clothing, knick-knacks, photos and the small bungalow, in Kelowna, B.C., that she bought for herself when my father died. My brother, sister and myself knew that a three-bedroom house in Kelowna’s Rutland neighbourhood wouldn’t afford us an early retirement, but Cameron McIntosh, an old high-school friend, now selling real estate for Royal LePage Kelowna, guessed that it might sell for as much as $650,000.

After decades working in small non-profit groups and charities, and then as a freelance writer, my savings are still pretty small. Like many Canadians, my investment background included two things: buying a home with a hefty mortgage, then selling it for marginal gains after a divorce, and a small registered retirement savings plan. For me, this inheritance will be about the biggest amount of money I will ever see.

My goal some time this year is to put my one-third share – say about $210,000 – toward a country home in France, where I now live. In the meantime, my question is: Between the time when I receive the cheque and when I’m ready to close my French house purchase, what should I do with what is a pretty large bit of money? It could just sit in my savings account, but is there a better route that might make me a little bit of money before we move it to France, and into euros, and buy that house?

I’ve never been in a position to do investing, so I asked some people who know that field. After talking to experts about what I should do, the answer turns out to be “not much” – but with a heavy proviso that we do live in interesting times. Between rising inflation, a war in Ukraine, rising interest rates and falling house prices, it seems that nothing is simple.

Andy Eisenbock is an investment adviser with Odlum Brown Ltd. in Vancouver, and someone my wife has worked with for several years. His advice was simple:

If the money is being held for my home purchase it should be in some form of liquid investment I can access at any time, and I should stay out of the stock market. He suggests that I need to watch the exchange rates between the Canadian dollar and euro, and investigate how best to make that currency conversion. He was right. At the moment the euro is at a historic low compared with the Canadian dollar. I’m crossing my fingers that it stays that way for a while longer, but am also comparing rates at my bank, and at money transfer services such as Wise.

Even though interest rates are rising, Mr. Eisenbock said that, for me, it was better to stay low risk, and liquid, than to try and chase a few hundred more dollars in potential income. That advice was echoed by Mark Tremblay, founder and director of Cinq, a French company that specializes in insurance and investments. I talked to Mr. Tremblay about what my options would be if I moved my money over to France instead of keeping it in Canada. His advice about liquidity and risk is much the same, but his suggestion is that in France many people would invest in l’assurance vie – life insurance. Savings plans based around life insurance are still very popular in France. As well as protecting your family should you die, they allow ordinary people to save for retirement over the term of their working lives.

L’assurance vie investments are very liquid – important if we’re buying a home. The safest place for my money would be a euro fund, a type of investment specific to life insurance, which provides significant security. It will give you a low fixed interest rate (around 1 per cent at the moment), but you will be sure to get your money back without any possible losses; the return is virtually zero-risk. We could get a slightly better rate with life insurance that includes a Unité de compte, or unit of account, an investment vehicle with more risk but better returns. And if more than 40 per cent of your life savings are in a UC, the interest rate is increased. In either a UC or a euro fund you’re encouraged by the government to keep your money there, saving for your retirement. Mr. Tremblay pointed out that after your investments have been in a euro fund for eight years, you’ll see a reduction in taxes paid on returns.

In Kelowna, I also talked with Steve Hatch, a wealth adviser with National Bank Financial. Right now interest rates are climbing, but I’m wondering whether they might come back down just as quickly. Mr. Hatch’s advice: If I believe that, I should choose the time frame I expect to park the money, and move it into a relatively safe place, such as a guaranteed investment certificate.

Or if I think rates will continue to climb, I could look at something like a money-market account with a variable rate that allow me to “reap the rewards of higher yields.” Ultimately, again, the choice is mine: more safety, or more return.

Mr. Hatch also has some Kelowna-specific advice: While home prices are dropping in major centres in Canada – in some cases by as much as 20 per cent – my mother’s modest bungalow may be immune to that drop because it still hits the sweet spot of being priced as a “starter home.”

There’s not a lot out there for single family residences between $500,000 and $750,000, he said. With that location and a price point of as much as $650,000, “I would hazard a guess that you’re probably going to get about the price that was suggested.”

The lawyer who has been handling the probate process for much of the past year says that even after the house has been sold it will likely be another two or three months before the proceeds arrive in my bank account. In the meantime, I’m left with more than enough time to choose the country where I will likely park this windfall, calculate my time frame, watch the currency exchange rates and determine the kind of security I’m comfortable with. Then I’ll need to put the cash in a safe, but income-generating, place.

The lawyer who has been handling the probate process for much of the past year says that even after the house has been sold it will likely be another two or three months before the proceeds arrive in my bank account. In the meantime, I’m left with more than enough time to choose the country where I will likely park this windfall, calculate my time frame, watch the currency exchange rates and determine the kind of security I’m comfortable with. Then I’ll need to put the cash in a safe, but income-generating, place.

 

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Get to know your banker and do your homework when moving your money out of Canada

Published: Globe and Mail
February 26, 2022
1185 words

Last year, when we moved from Vancouver to France, my wife Susan and I joined the several thousand Canadians who leave the country each year to settle elsewhere in the world. It was a permanent move, and we believed that we had planned carefully for every eventuality.

We were mostly correct, except for one thing: Our bank worked incredibly hard to keep us from moving the money from our house sale to our new country. Our first month in France was spent on international phone calls, talking to bank employees at several levels, sorting out conflicting advice, and having our account frozen a half-dozen times. To those following in our footsteps, we say: Take nothing for granted.

Like many Canadians our relationships with our banks began and ended with websites and bank machines. The only time when we actually sat down with a bank employee would have been every few years for mortgage renewals.

That’s not enough. If you’re planning an international move you’ll need to work on establishing a much closer relationship with your banker. As described by Joe Reid, Vancity credit union’s vice-president for wealth management and impact investing, you should begin early in the planning process by talking to “your trusted advisers … your lawyer, your accountant, any of your professional advisers.” That necessarily includes someone at your bank with experience in handling international money transactions.

Begin this process immediately upon deciding to move internationally, and when you meet with a representative at your local bank, be prepared to question them. Not all bankers have experience in this area, and they may need to pass you on to someone else who knows the ins and outs of large funds transfers, exchange rates and money laundering rules.

Beyond your bank, take time to thoroughly review things such as pensions, registered retirement savings plans and other investments, and especially your will. Inheritance rules in other countries can be very different. You may need two different wills, and an understanding of how your children can avoid inheritance taxes in your new country. You’ll also need to make sure that your family members understand the steps that they’ll need to take when you die.

John Lyng was a customer of Toronto-Dominion Bank for more than two decades when he and his wife left Canada for France. “I thought I had a good relationship with them,” he says, but when he needed to borrow money to secure a lease on an apartment in Paris he found himself turned down even though they were about to sell a home in downtown Toronto. Because Mr. Lyng was new to France, the landlord demanded that he place three years of rent payments in an escrow account or with a guarantor that would guarantee his ability to make rent payments.

His TD banker apparently had no experience in France and refused the loan.  “It’s a very unusual way of doing it,” the banker told Mr. Lyng of the landlord’s request. Mr. Lyng eventually found a loan through a mortgage broker.

We relate Mr. Lyng’s experience with TD only as an example. He’s a member of the popular Canadians in France group on Facebook; other group members, using various Canadian banks, tell similar stories.

“Please be aware that TD customers have several options for transferring funds out of country,” a spokesperson for the bank said in response to an e-mailed query from The Globe and Mail.

Vancity’s Mr. Reid is more specific in advising people leaving Canada: Understand that the rules will be different in other places, both in government and at individual banks. Although technically there’s no limit on the size of a transfer that you can make, individual banks have their own internal rules, and almost all international transfers above $10,000 will be reported to the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC). As well, you need to understand that even if your local banker is prepared to move funds to you in France (or wherever), the receiving bank may have its own barriers, or may require that you meet local anti-money-laundering rules.

In many cases, it isn’t possible to open a bank account in a foreign country until you arrive. In France, for instance, you invariably will be asked to provide a copy of a current electric bill to prove your residence, and it may take weeks for the new account to be active. In the meantime, don’t cancel your Canadian cellphone number. You can be sure that at least one financial institution will insist that you can’t log in without them sending you a secret code to a Canadian phone number.

Once you’re finally in your new home, and have your new bank account set up, you should still expect surprises from Canada. Mr. Lyng was settled in the suburbs of Paris, and every month arranged to transfer a few thousand dollars from Canada to France for living expenses. Until one day he couldn’t.

“For about one year I was able to do wire transfers, I was able to call the branch manager at the TD branch and they would do it. Until about three years ago when they said ‘we have new security precautions … if you want to do a wire transfer you need to come into the branch in person.’”

When Mr. Lyng explained that spending thousands of dollars to fly to Canada and stay in a hotel made no sense, the bank suggested that he write himself a cheque on his TD account and deposit that in France. According to Mr. Lyng, the cheque bounced when TD claimed there were no funds in his account to honour it.

Since then, Mr. Lyng has done what many other Canadians in Europe do. He relies on a money-transfer company to move funds out of his bank account and into his French one. Companies such as Wise and TorFX can make this easier, and often also offer better exchange rates and lower service charges than the Canadian banks.

Sharon Anne Kean, is senior director of global expansion at Wise, one of the leaders in global money transfer services, and one of the companies frequently recommended on the Canadians in France Facebook group. Ms. Kean’s advice echoes that of Vancity’s Mr. Reid: Start planning early, especially if you need to move large amounts for a home purchase. Like the banks, she says Wise takes security seriously. That means making sure the sender is who they say they are, “but then also doing a check on where you’re sending money to, such as a sales agreement for your new home, or something that verifies that the money is going to a good place.”

Ms. Kean also encourages customers to do their homework. In particular, understand that the “best exchange rate” quoted by your bank may include hidden fees that make it less attractive than what Wise might charge. “That’s a massive revenue stream for most banks. That’s why our rates appear to be more competitive.” Ms. Kean says that both their consumer and corporate customers also appreciate that Wise moves money much faster than the big banks.