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Originally Posted by GP_Matt
I hadn't considered that, but it does make sense. They lose EI, CPP, vacation time, holiday pay and WCB coverage. All of the above would be based on their minimum wage salary and would not include tips.
It is actually a pretty terrible system whereby waitstaff trade lower taxes in exchange for giving up their social safety net.
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Another point of consideration, is say a server makes $12,000 in wages and $40,000 in tips. I'm guessing most servers would only claim about $6,000-12,000 in tips. Their tax rate is nominal, so they are taking home about $50,000 in the year. In order to take home this amount in Alberta you are looking at grossing around $65,000. The servers would have to earn about 30% more in wages and tips, just to get back to the same point they were at before the change. If you knew this as a server, there is very little chance you go to a restaurant that has a no tipping policy, when there are many other restaurants in the city.
I understand almost all income is taxable, and servers should be reporting all of their tips. I don't want to side track the current discussion on tipping, but I will say that the amount of servers who properly report all of their tips is almost nil. Whether that is right or not, is another discussion. I'm just trying to show how much a server would need to make to bring them back to the level they were at before a no tipping policy would be inserted.
Restaurants would be much quicker to cut servers near the end of the lunch or dinner rushes, as labour would be such a huge component. Many servers work overtime, and the cost in dollars isn't that much higher to the restaurant. If a server was making $30 per hour, at OT they would be at $45. That's crazy.