Corey Mintz is the author of The Next Supper: The End of Restaurants as We Knew Them. And What Comes After.
It’s rare that I get excited about technology in hospitality. But things seem to have become more equitable for restaurant workers looking to distribute tips digitally.
Earlier this year, I wrote for The Globe and Mail about XTM Inc.’s PAID-CN software for distributing restaurant tips. The Ontario Ministry of Labour told me at the time that it was looking into the increasing use of the software, after I asked about XTM’s practice of doling out the money in prepaid cards.
While the cards can be used directly, users would have to pay a fee to transfer the money into their own bank accounts. Essentially, restaurant workers were sometimes being charged fees to get paid.
Now, I am pleased to learn that the Ontario government’s proposed labour reforms, announced Tuesday, include requiring employers who pay tips via most electronic methods to allow their employees to select the account where the tips are to be deposited.
“This would help workers avoid fees they didn’t agree to so they may access their tips in full when needed,” the government said in a statement.
As well, the Ontario Restaurant Hotel & Motel Association (ORHMA) has endorsed Atlas, an XTM rival for digital tip distribution – and one that seems to have been developed with input from workers as well as employers. It does not charge workers for accessing their own tips.
My concern about the use of XTM was the likelihood of repeating the Uber/Airbnb playbook, where the ramifications of disruption technology go unaddressed until the companies with the biggest market share have become too entangled in our economy for lawmakers to act.
I worried that XTM’s model would become the new status quo.
There is the real risk of that. This year, I found myself at a hospitality conference moderating a panel on tipping. On stage and in private conversations, I heard about the need for a technological solution for tip distribution. The traditional method, requiring a manager to spend hours every week poring over scheduling spreadsheets and stuffing envelopes with cash, is archaic and time-consuming. It costs small businesses too much.
But software needs to be more than efficient. The ideal solution should incorporate the needs of employees and employers, while also being CRA-compliant.
This is what I heard from a variety of industry insiders. They wanted something that checked all the legal boxes but wasn’t going to become a PR liability by angering employees.
So I was glad when, shortly after the conference, ORHMA endorsed Atlas. And, weeks later, the Ontario government announced its proposed law.
The timing of the industry association’s endorsement and the government’s announcement, and the fact that those moves specifically addressed my concerns, is evidence that these issues played no small part.
A spokesperson for Restaurants Canada, another industry association, said, “There have been issues in the past with some apps that were found to have questionable programs,” without naming specific ones.
With Atlas, at the end of each shift, tip amounts are placed in the control of the employee tip committee, an employee-led body that governs tip distribution. The software then uses schedules and tip division rules to set up automatic direct deposits to employee bank accounts on a weekly basis.
Such a system is not quite the gold standard. Square Payroll in the United States, for example, directly sends payments for food, drinks and taxes to the restaurant’s account, while sending the tip to its own account. This is dual payment processing, and it gives employers the least headaches with respect to complying with tax-agency guidelines.
The Ontario government can also do more than just introducing this change. I would like to see more resources put into enforcement, so employers can see that this is a zero-tolerance issue, unlike much of what happens in hospitality labour, where the languid process of investigation has left workers feeling like there’s no point in filing complaints.
But Atlas is a far better solution than XTM, and ORHMA’s endorsement of it and the province’s proposed requirement are steps in the right direction.