As Chef Michael Vernon (left) prepared lobster tails for that night's dinner, he discussed upcoming tip-sharing policies with kitchen staff at Pismo's Coastal Grill. Photo by Edward Smith.

published on April 27, 2018 - 2:49 PM
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Earlier this week, a group of local restaurant owners applauded a federal law that changes which workers can receive gratuity, though many questions regarding why this decision even arose still existed.

In what was a surprise to many restaurant owners, Congress put a rider in its most recent spending bill allowing tip-sharing for kitchen staff and dishwashers.

“People come to a restaurant for food, the kitchen works their tail off for that food,” Dave Fansler, owner of Pismo’s Coastal Grill, Westwoods BBQ and Spice Co and Yosemite Ranch Steak and Seafood. “The server should appreciate the kitchen’s work just like the customer does.”

While most chefs and cooks will earn larger wages on top of receiving more work hours—between 30 and 35, while servers are scheduled between 20 and 25 according to Fansler—the take-home pay pales in comparison. Fansler says waiters will make up to three times what a cook does. And until recently, there were a lot of protections to keep it that way.

“This has been the dirty little secret that has gone on for way too long,” Fansler said.

Before the bill passed, waiters forced into tip-sharing pools could sue restaurant owners through the Fair Labor Standards Act, according to a 2016 legal analysis by Matthew Mara and William Gutierrez, attorneys with Gutierrez Marca LLP in San Francisco. Tip sharing was limited to only those people who are “customarily and regularly tipped,” meaning servers, waiters, bussers and hosts, but not people in the kitchen.

Fifteen years ago, Fansler tried to implement a tip-sharing policy but was threatened with a lawsuit from the Employment Development Department.

“The logic behind it doesn’t exist. How could you not consider the back of the house an integral part of the dining experience?” said Mike Shirinian, owner of Elbow Room Bar & Grill and Riley’s Brew Pub who is one of the state board of directors for the California Restaurant Association.

For many restaurant owners like Shirinian, bringing kitchen staff in to partake in the rewards of good service is obvious.

“There is a significant amount of money that can be earned by a team that puts out great service,” said Shirinian. For servers at the Elbow Room, servers can make anywhere between $35-65 a night in tips.

Elena Corsini Mastro at Parma Restaurant has already begun discussing tip sharing with her wait-staff.

“Overall—70 percent—they are willing to do it,” Corsini Mastro said of her servers.

At Fansler’s restaurants, he’s only about a month away from implementing a new tip-sharing pool. How much money people will get will be determined by things like the number of hours they work.

“You need a very systematic and equitable system otherwise anarchy will come into the place,” Fansler said.      

What the new law says is that now restaurant owners are now free to implement tip-sharing rules as they see fit, whereas rules before were a bit more muddled.

In California, what started the question of who gets tips was section 351 of the California Labor Code, which at the time it was written, decided that tips are the “sole property of the employee to whom it was paid,” according to an older legal analysis by Marca following a benchmark case in 2009.

That case, along with another one in 2010 at the Ninth Circuit Court of Appeals, said that tip pooling could extend to dishwashers and kitchen staff. Shortly after though, in 2011, the United States Department of Labor implemented a rule that “expressly prohibited” bringing staff into tip pools who aren’t regularly tipped, according to Marca’s 2016 analysis. This decision was partially derived from a lawsuit involving casino dealers who at one time were forced to share tips. A court decision in 2016 from the Ninth Circuit Court of Appeals further codified the Department of Labor’s restrictions.

While the California labor code said it was legal to include kitchen staff, the federal one did not. And the muddled rules discouraged restaurant owners from challenging them.

“It was kind of hard to know where you stood,” said Fansler. “I’ve never been able to get it legal at federal and state at the same time.”

Many restaurant owners across the state just didn’t think pursuing the matter was worth the consequences.

“Its not their money anyway. You’re getting sued over tip pooling,” said Marca, who has worked with many restaurants at his firm.

Now that restaurant owners can be confident that the feds and the state are on the same page, it is up to owners like Shirinian to decide where that money left after a good meal goes.

“Let’s get everyone educated and determine what’s right and what’s fair,” he said.

Correction: An original version of this story incorrectly stated that the California Restaurant Association released news about the change in federal law allowing kitchen staff to participate in tip pools with front-of-house staff.

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