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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.”