Proposed R.I. bill to regulate restaurant tips draws a crowd

Below is an article from the Providence Journal regarding some proposed state legislation in RI around tips. Here are a few of the items the bill covers:

  • Would prohibit employers from deducting a credit card service fee from a tip left for an employee
  • Would also ban required tip pools
  • Would require that the employee receive the total amount of both tips and “service charges”
  • Anyone in violation would be fined up to $1,000, be sentenced to up to 60 days in prison or both
  • Employees who successfully sue their employers for relief would be entitled to attorneys’ fees and three times the damages claimed

What do you think about these proposed changes in RI? Are any of these happening currently at your restaurants? The tip pools seem a little odd to me. They also mention in the article that there’s some goofy language that needs to be ironed out. Are similar bills being proposed in your states?

The full article is copied below:

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PROVIDENCE, R.I. — With more than 65 people signed up to testify on a bill that would impose a number of restrictions on how employers handle tips, K. Joseph Shekarchi, chairman of the House Committee on Labor, asked that the hearing room doors remain open Thursday so that fire code standards could be met.

“I know this bill invokes a lot of passion,” Shekarchi said as a marathon of testimony from restaurant owners and servers began.

Rep. Aaron Regunberg, D-Providence, who sponsored the bill, described it as legislation intended to address the “widespread problem” of “tip theft.”

The bill would ban employers from taking a portion of an employees’ tips in several ways. Among them: It would prohibit employers from deducting a credit card service fee from a tip left for an employee. It would also ban required tip pools. Several people, however, questioned language in the bill that would permit a “valid tip pool” without defining what would meet that standard.

The bill also would require that the employee receive the total amount of both tips and “service charges,” a separate fee sometimes placed on a bill and then divided among multiple parties.

Anyone in violation would be fined up to $1,000, be sentenced to up to 60 days in prison or both. Employees who successfully sue their employers for relief would be entitled to attorneys’ fees and three times the damages claimed.

Chris Tarro, co-owner of the Sienna Restaurant Group, said that while he understands the intent of the bill, it would take money out of an already struggling industry. For example, he said, his staff is aware that credit card fees are deducted from tips. Those fees annually total roughly $65,000 at his restaurants. While he said he didn’t doubt there were examples of people in the industry who aren’t able to pay their bills, at his restaurants, servers are typically the highest-paid hourly employees.

“It’s a tough industry,” Tarro said, “and if you keep taking money out of this industry … we only have so much. We’re bone dry.”

But Jamie Sarafeh, a former waitress and dishwasher, said servers need a more reliable form of income.

“Everyone I know that works in food service is scraping by,” she said. “I understand that a lot of you restaurant owners aren’t multimillionaires, but relative to what we’re making — a few cents means so much more to us.”

But the arguments weren’t all based on who should keep the money.

Bill Kitsilis, owner of Angelo’s Pizza Palace in Cumberland, called the bill an “administrative nightmare,” referencing language that the only times tip can be shared are in proportion to the service provided.

“What does that mean?” Kitsilis asked. “On Friday night at Angelo’s Pizza, I have two people working the counter up front, two cashiers in the bank answering phones. They’re not doing the same exact work. There’s one tip jar up front. They all share equally. They’ve been doing it this way for 30 years without a problem.”

Regunberg said he realized there were valid issues with the language and definitions in the legislation that could be addressed.

“In order for us to have productive dialogue and come to a solution that’s optimal for all parties,” Regunberg said, “we first have to take as valid that this is a real issue.”

 

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