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Sunday, August 26,2012

Local restaurant-bar bans tips in reaction to federal rule

By David DeWitt
Photo Credits: Photo by Kevin Riddell
Photo Caption: A dollar bill, left as a tip, rests under an empty beer can at the bar at Casa Nueva on Friday.

Starting this Saturday, a popular Athens restaurant and bar will no longer accept tips.

The change in the Casa Nueva/Cantina's policy is being made to keep the business in compliance with the Fair Labor Standards Act, a posting on the West State Street restaurant's website announced.

The FLSA "forbids businesses to pool and share tips among their entire staff," the announcement explained. This has long been the Casa's policy, unlike many restaurants and bars that allow individual employees to keep their tips rather than pooling and dividing them.

"In order for us to continue to pay everyone we work with a fair wage, keep control of our labor costs, be able to buy as much local product as we can, strengthen the economic well-being of our community and provide you with the best food and drink possible, we have made the difficult decision of raising our prices to do so," the posting further explained.

The restaurant had been under investigation by the U.S. Department of Labor regarding the pooling of tips, leading to the 29 worker-owners of Casa to decide last week to alter their policy, foregoing tipping but raising prices. This move will put the business back into compliance, though shifting to a more traditional "keep-your-tips" policy evidently also would have satisfied the federal agency.

"Casa Nueva has pooled and shared tips for the last 27 years," they acknowledged in the announcement. "We value each and every employee as an equal, which means that not only do service staff receive tips for their hard work, but the back of house does as well. Your greatly appreciated tips have really made our business work."

The policy had been for each person at the business to share the same base wage and then pool and distribute tips equally at the end of each pay period. Under the new policy, employees will still share the same base wage, and a percentage of the revenue from price increases will be distributed.

The Casa website states that the recent changes to the U.S. Department of Labor's FLSA has encouraged many businesses across the country to adopt no-tipping policies. This is reportedly common in some European countries.

"Raising our prices and no longer accepting tips is the only solution we see right now to adhere to our values and be in FLSA compliance," the worker-owners' statement said.

As for why Casa, and reportedly two other Athens restaurants, became the subject of investigation, the worker-owners said they don't know.

"As far as we know, no one on our staff filed a complaint, since all employees were made aware of our tip-pooling practices before they were hired," they wrote. "It appears that this is all part of the enforcement of the new tip credit regulations."

Along with the alterations of the menu to include service fees, a "detailed statement" has also been posted in the business's menus and around the restaurant.

"Many of the price increases are subtle, based on the previous tip averages and our cost of goods and labor expense," they wrote. "We know you might be experiencing some pricing shock, but remember that this price includes our cost of service to you and you can no longer leave a tip."

But what happens if a customer forgets the new policy and leaves a tip anyway?

"Casa will donate the money directly to a local charity of our choice," the worker-owners wrote. "If you forget and try to add a tip on your credit or debit card, you will notice that there is no longer a line to include a tip. Your waitron or bartender will also remind you that we no longer take tips as they bring you your check."

They added that while they know this is something new that will take getting used to, with the new pricing, customers' total out-of-pocket expense will "most likely remain about the same."

The worker-owners also reiterated their commitment to fairness to their employees, in defense of their previous tip-pooling policies.

"As a cooperative business, we do not want to favor one person's role over another, but rather pay a fair wage to everyone whether they are waiting, tending bar, cooking or doing dishes," they wrote. "We value versatility and job rotation. Our employees perform many different jobs that contribute to the success of our business."


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Under investigation? Why can't they go after the important stuff, like people not getting paid overtime they deserve, or treated like contractors when they are really employees. For crying out loud, this is why people get so upset with government; it completely obscures the good things that government does.



If the policy was ever really voluntary, the solution is obvious: the employees can individually receive tips, in compliance with the law, and voluntarily pool them and distribute them, either daily or monthly.  If that wouldn't work, it would be because they only ever did it in the first place because they were forced to do so.  The law doesn't dictate what you can do with the tips after you get them, only that the business can't intercept the tips that were left for you.

The law is a good one, intended to prevent businesses from ripping off employees by taking a house cut of tips, which is more common than people would like to think.  Obviously, it wasn't intended to complicate matters for employee-owned co-ops.

The "solution" this restaurant came up with is over-reaching, and apparently designed to draw attention to themselves and put a protest against a law they dislike in the face of everyone who reads their menu.  Apparently, all their meals now come with a free side order of drama.



I don't think you are being entirely fair, woodrobin. Casa has always had an admerable ethic of equality. Sure employees could voulntarily pool their tips, but eventually somebody would decide not too. Eventually this would errode an important part of what makes Casa what it is. Why shouldn't they draw attention to a law they disagree with? Casa has never been shy about putting their values on the menu. That seems more like a civic virtue than "drama" to me. 

I actually hate tipping as a social custom. I tip a minimum of 20% and I hate it every time. The only thing I hate more is when people do not tip. Why should it be up to me to decide if someone will earn a living that day? If it is a slow day, servers often effectively earn nothing for a day spent sweeping up and stocking items. People deserve to earn a living for honest work. Tipping makes it feel like that is a matter of my largesse rather than a fair price for an honest service.

Anyway, yay Casa. They are in the top 5 things I miss about my home town.



I would guess the law has more to do with that fact that a lot of people don't pay taxes on their tips.

"...the U.S. Department of Labor's FLSA has encouraged many businesses across the country to adopt no-tipping policies. "

If they add the tips into the cost of their product, the state gets her full share.



I'm not sure how I feel about loosing my power as a customer with an across the board price hike. Not that it happens too much, but on occasion when receiving poor service I might decide to leave less of a tip. It does make me feel a bit chaffed that I'll pay more even if the service happens to be sub-par. 

One may argue that in the service industry without tip pooling it fosters an environment where the individual server may out perform others based on their attentiveness, politeness, etc. leading to even higher income. The pooling flattened out that incentive. I'm not sure the new policy does anything to change the environment there.

While guaranteeing less income from those who've received exemplary service and may be inclined to tip higher than 20% (the chosen charity for tips left will thank you) it's also created a situation where those who might be displeased won't be coming back if they realize they're paying a premium for the unique collective ownership business arrangement. 

Ultimately, as a consumer I'll have to factor the standards and consistency of food/bar service when choosing which business to patronize. I can say not having the option to express displeasure through the level of my tipping may lead to fewer visits when making that decision. Removing a customer's passive way of expressing their displeasure may encourage those like myself who'd rather not confront their server/bartender (or whomever would be the equivalent of a manager there) with complaints may cause a loss of business beyond my own.