Ripple effect is in motion following the hike
Employers are taking steps to control labour costs after the minimum wage rose to $14 an hour on Jan. 1. But they are also learning that sticking to the bottom line can have negative effects on business.
The owners of at least a dozen Tim Hortons outlets have told workers they are rescinding perks and paid breaks, news that quickly went viral.
The action is “nothing short of bullying behaviour,” said Labour Minister Kevin Flynn on Friday.
“These franchise owners are trying to make a statement, but instead of coming to the government to make that statement, they’re taking it out on their employees. That is simply wrong,” Flynn said in a statement.
Earlier in the day, Tim Hortons head office was quick to blame the actions on a “rogue group” of franchisees.
“These recent actions by a few restaurant owners, and the unauthorized statements made to the media by a ‘rogue group’ claiming to speak on behalf of Tim Hortons, do not reflect the values of our brand, the views of our company or the views of the overwhelming majority of our dedicated and hardworking restaurant owners,” said the restaurant chain in a statement.
Here’s what some business owners are doing in response to an increased minimum wage: Who: Tim Hortons outlets
What happened: The Tim Hortons empire shifted into damage control mode Friday after employees in a handful of outlets went to the media with letters from their employers indicating that the higher minimum wage had made it necessary to scale back on benefits and perks. Workers at a Cobourg location were told that they would no longer receive a paid break and they face paying for a percentage of their benefits. Some incentives, such as a paid day off for not calling in sick after six months, were also being cancelled.
In one letter to workers dated Dec. 12, the owner of one outlet said the labour costs had increased in an “absolutely massive way.”
The letter assured the workers that the franchisee was doing everything it could to eliminate the possibility of laying off workers.
“Unfortunately when wages rise at such a fast pace we cannot raise our prices at the same rate to offset the costs and something has to give.”
As news spread in the news and social media, it ignited a firestorm over the iconic Canadian brand.
“Tim Hortons is a really important part of daily life of millions of Canadian families. But so is having a decent living wage,” said Premier Kathleen Wynne.
What the employer says: Almost all Tim Hortons locations in Canada are independently owned and operated. In a statement released Friday, head office said the furor was “caused by the actions of a reckless few.”
“While our restaurant owners, like all small business owners, have found this sudden transition challenging, we are committed to helping them work through these changes. However, Tim Hortons team members should never be used to further an agenda or be treated as just an ‘expense.’ This is completely unacceptable.”
Who: Sunset Grill
What happened: According to workers, the breakfast restaurant chain changed its tipping pool policies at the same time as the minimum wage increase kicked in.
Tipping pools are common in the restaurant industry, requiring staff to pay a certain percentage of the pre-tax bill a “pool” to give support staff such as dishwashers, hostesses and cooks a percentage of tips.
These percentages increased from four to five per cent at Sunset Grill, prompting some workers to argue that the clawback has nullified the wage increase.
What the employer says: In its memo to employees, Sunset Grill said tipping pool percentages were increasing to “encourage a team effort of service as our non-serving staff play a large role in the overall service of our business.” What: Rainbow Foods
What happened: Rainbow Foods, an independent Ottawa health food and supplement store with two locations, said employees would lose two paid 10-minute coffee breaks. Co-owner Mischa Kaplan told CBC News he faced pressures, including the increased minimum wage, the CPP increase and the retail environment, and his only other choice would have been to cut staff.
Kaplan said his business is maintaining health and dental benefits and paid lunch breaks.
“We are not trying to nickel-anddime employees, we are trying to navigate a very challenging period. And we are doing so for the health of the business,” Kaplan said.
What happened next: “As of this morning, our employees will continue to receive all benefits that were in place before January 1, 2018,” Rainbow Foods spokeswoman Sarah Kaplan said in a statement on Friday. “At no time were employee wages reduced or removed and we will continue to work toward providing our employees with several above and beyond minimum legislative standards that we’ve had in place for years and years. We listened to our customers and employees and look forward to another great year!” What: Le Moulin de Provence KD
What happened: The Metcalfe Street bakery-café has been praised for increasing the wages of some employees up to three times since it opened about 18 months ago. Prices of products have increased between 10 and 20 cents.
What the employer says: Co-owner Karina Hayston said having longterm employees creates good customer relationships and reduces the need to train new workers. Of the café’s 12 employees, five have been there since it opened.
However, given the quick increase to the minimum wage, Hayston can’t say if she can keep up with that policy.
“It’s our business. It’s our baby. We want to keep our employees happy. I would love to give employees more than minimum wage. It gives them incentive to be here.”
Leeway: What employers can and can’t do
Under the Employment Standards ■ Act (ESA), an employer can set out the general terms and conditions of employment, as long as the ESA is followed. These terms and conditions include wage rate and hours of work, and time off for meals and breaks. Terms may also include premiums for benefits or paid time off work.
Under the ESA, employees have ■ a right to a 30-minute unpaid eating period after five hours of work. However, if the employer and employee agree, the eating period can be split into two shorter eating periods within every five hours worked. If shorter periods are taken, they must equal at least 30 minutes. This agreement can be oral or in writing. The ESA does not require an employer to give other types of breaks in addition to the eating period.
Employers may provide additional ■ breaks. However, generally, an employer must pay an employee for a break, such as a coffee break, even if the employee is not performing work so long as the employee is required to be at the place of employment during this break and the break is not a designated eating period. If the employee is allowed to leave or is required to leave the workplace during this break, work will not be deemed to be performed and the employer is not obligated to pay the employee for this time.
Employers can decide if tipping ■ is allowed in their businesses. If it is not allowed, the employer should make it clear to customers that tips and other gratuities will not be accepted by employees or the employer.
The ESA does not regulate ■ which businesses can gather tips. However, under the ESA, tips received by an employee or employer are regulated.
People usually act in their self-interest, and are fully entitled to do so. As a result, it should surprise no one that the business sector — in particular small business — is moving to protect its interests as a result of Ontario’s minimum-wage hike. The results haven’t been pretty. Yet the premier responsible for the wage changes seems astonished that her policies have actual consequences.
And so, facing a spring election, Kathleen Wynne this week picked a rhetorical fight with two Tim Hortons franchisees, evoking class warfare and blaring about “bullying.”
There are less crassly political ways to deal with the situation.
Some background: As of Jan. 2, the minimum hourly payment to workers in Ontario rose from $11.60 to $14. In January 2019, it will rise again, to $15. While most Ontarians want to see low-paid workers do better, that’s a sharp increase in a short period.
The immediate results have included: some businesses absorbing the higher wage cost; others raising prices; still others either laying off staff or cutting the number of hours for which they pay workers; and in the gloomiest cases, businesses deciding to shut altogether. Painful adjustments were to be expected.
In one high-profile example this week, the children of the founders of Tim Hortons (the company is now owned by Restaurant Brands International) told workers in two Cobourg franchise locations that they would no longer be paid for breaks, and their benefits would be cut too. That’s not good for those workers, but it is legal.
Wynne quickly rushed to the rhetorical rescue, painting franchise bosses Ron Joyce Jr. and Jeri Horton-Joyce as drooling capitalists. “When I read the reports about Ron Joyce Jr., who is a man whose family founded Tim Hortons, the chain was sold for billions of dollars, and when I read how he was treating his employees, it just felt to me like this was a pretty clear act of bullying,” the premier riffed. Many Ontarians will agree with her. It may be that the Tim Hortons outlets in question are behaving badly. Parent company RBI seemed to think so Friday, lashing out at the “actions of a reckless few.” Other coffee spots (including some in Ottawa) have handled the mandatory wage hike differently, by opting to raise prices, or employing fewer staff.
If consumers think any of these actions are unjust, they can send a message by simply buying their java elsewhere. That would be much more effective than the premier’s brew of overcaffeinated bombast.
In the end, only the market — which includes us buyers — can sort out this mess.