Tipping is Not Only Bad for Workers, It’s Bad for Legal Businesses

tipsLittle Rock    Sara Jayaraman, the co-director of Restaurant Opportunities Centers United and director of the Food Labor Research Institute at the University of California at Berkeley recently wrote an impassioned op-ed largely trying to put pressure on Andrew Cuomo, the Governor of New York, to extend the increase in wages from fast food to all workers in the state. She made many excellent arguments including the racialized history of tipping, the progress in Europe in moving away from tips, and the low waged ghettos of largely women workers dependent on tips and often vulnerable because of that dependency, One argument she didn’t make is that by eliminating tipping as part of food service workers pay, we would be bringing the restaurant industry out of the gray market of dodgy, illegal wage practices and putting all businesses on an equal legal footing.

The Fair Labor Standards Act is clear. When tips are part of the income paid the worker, the employer is required to pay withholding, social security, unemployment, and workman’s compensation on the full sum of the wages paid. As every employer knows the full package often is 25% to 30% more than the wages themselves. The FLSA requirement is not just for restaurants using the $2.13 per hour tip credit wage and offset the gap between $2.13 and the federal minimum of $7.25 per hour my adding the tips in, but for all workers no matter what the hourly wages paid and what level of tips are collected.

Logically and justly, this is the way it should be obviously. A food service worker should have the same opportunity for unemployment as other workers and the same opportunity when they reach retirement to collect on their full and actual wages – including tips which often exceed their hourly pay – when they are elderly. The Department of Labor doesn’t live in a fantasy world, and there is no pretense that even a fraction of employers are paying the full package. Basically, they look the other way. There have been enforcement strategies where there has been a mandated percentage, starting at 8%, paid on the assumption of unreported tips dating back more than 30 years. Ironically, there are more rules and enforcement about employers keeping their hands out of the tip pool than there are rules to make employers pay what they are required in benefits for their workers on the tips.

All of which puts legal employers at a huge financial disadvantage in the market. Fair Grinds Coffeehouse in New Orleans is a 100% fair trade, small, social enterprise L3C business, supporting ACORN International’s community organizing in Latin America, India, and Africa. We pay a non-tipped minimum wage of $7.25 and a tip pool adds another $6 to $8 dollars per hour, depending on the season. We pay, as required, the full package of benefits to our workers. We are, in fact, members of ROC, but we are at a huge disadvantage in the marketplace as well.

Arguably, the straight wage is compensated by our community of customers that buy our coffee, tea, and food. The tips are hypocritical gratuity, where on both sides of the transaction the customer and worker pretend it’s a gift, knowing full well that it’s a vital part of wages. Fair Grinds though has no income stream that gives us the money to pay our 30% legal obligation on the tipped part of the wages though. We in effect are subsidizing the “gift” of the customer and the wage of the worker.

Meanwhile Starbucks acts like it’s a hero for paying $10 per hour and like almost all restaurant employers, looking the other way on the tips. And, the small time competitors just look the other way and hope they don’t get caught, while quietly and directly exploiting their workers. Danny Meyer, the big whoop high-end New York restaurateur, has gotten huge publicity for raising wages and eliminating tips at his restaurants and doing so by raising prices. Not sure why he gets praise for this, since he just saved his operation money, because if he were operating legally like Fair Grinds he would have been paying the package out of his own pocket, and now by raising prices he is paying his workers legally out of his customer’s pockets and clearing more money by doing so.

While people pretend to be oblivious of how workers’ pay and employers’ obligations work, social enterprises and straight shooters like a Fair Grinds who are not in a market position to simply charge a premium to cover the costs that our competitors ignore, businesses rip-and-run over their workers and their wages with the implicit permission of lax and lazy government enforcement and explicit support and pretense of their customers.

We need to end tips to put all workers on solid footing and all businesses that employ them on the same even playing field.

Flyering Door-to-Door is a Constant Neighborhood Education

11096396_1064931363535826_3795957975232855805_oNew Orleans     Opening a new location of our social enterprise Fair Grinds Coffeehouse on St. Claude Avenue in New Orleans was a relief even if we’re still shaking out the kinks, installing the ice machine, this and that.  How we get the word out for our soft opening and early weeks has been a constant conversation filled with many ideas.  One will say how we need to update our social media on Facebook and our website.  Ok, let’s do that.  Another will say, let’s open up for events, a baby shower here, a violin recital there, and a local meeting here and there.  Sounds good, Ok, let’s do that, too.  But, you can’t take an organizer off the streets, so what I wanted was flyers and lots of them and bigger flyers that I could put up on telephone poles, bus stops, and wherever people might gather.  Would it work?  Who knows, but it’s what I know, and what I like, so….

A week of rain finally stopped and I had a commitment from my son, Chaco, to hit the streets with me, so he could take one side, and I could take the other.  I wanted to hit the immediate neighborhood behind our offices and the coffeehouse that was still in the throes of change between a lower income – working African-American neighborhood and the first waves of urban pioneers and families grabbing something semi-affordable in one of our last slivers of a neighborhood in transition, but still close to the French Quarter and the red-hot Marigny and Bywater neighborhoods.  We had cloudy skies, bright pink flyers, and away we went.

Going block to block, door to door, and flyering is always an education, and it’s hard to get one better than street-side.  You miss things from the windshield that are uncovered walking your dogs along the sidewalks and up and down the porches.  The added benefit on a Saturday afternoon is that you also have some stoop sitters, mailbox checkers, and random walkers and workers on the street that can be engaged in conversation.

Until the rain drove us off the turf, Chaco and I managed to cover the grid for an hour.  Almost half the houses are in transition, either “fixed and fine” or under construction in one way or another.  I had not realized this corridor was going so fast.

On the street, neighbors were making the adjustment.  An African-American couple sitting on their porch yelled out at a young 20’s something white couple with the young man uncomfortably wearing a tie, that they looked good dressed up, while the youngsters tried to laugh it off as they walked down the middle of the street.

We had conversations on both sides of the line.  Old residents, some barbequing on their porches or sitting in the shade were uniformly friendly, usually asking if we served breakfast.  They knew our location as next door to the beauty supply house.  Newcomers knew us as next door to the hipster-punk bar, Sibera.

One bicycle rider reminded me that he was already a regular. Right on!  A guy working on his house asked through the window if we were connected to ACORN and then said that he had been a midnight to 2 AM DJ with a woman named May in 2008 and 2009 at KABF in Little Rock, and I told him to get his act together to do the same thing on WAMF once we were on the air in New Orleans.  A big guy bushwacking around the old, abandoned Annunciation church buildings told me it would be some years before they were returned into community service, but they were starting.  He knew about the coffeehouse and returned the flyer so we would save money.  The grandson of the Cuban tire dealer who sold us the building was on St. Rock behind the new food court that just opened, but said he would be by soon for a cup of coffee.  Chaco found outstretched hands from all of the service workers behind the building who were desperate for a place to have a cup of coffee that was away from their workplace.

Raindrops as big a dimes started falling on us as we came back towards the coffeehouse where a baby shower was in progress behind the iron gates and pink ribbons were tied above the sign saying, “closed, open at 6 am.”

We had the flyers out and were really part of the neighborhood, both old and new, now.

“Soft” Opening for Second Fair Grinds Coffeehouse on St. Claude

IMG_2909New Orleans        They call it a “soft” opening because it’s a way to cushion the hard falls that come when something like a fair trade coffeehouse makes its debut.  After three-and-a-half years running Fair Grinds Coffeehouse as a social enterprise supporting our organizing in another neighborhood, we aren’t exactly rookies anymore, but no matter the amount of preparation, something is going to give.

Set to open at 6AM on what we called “No Fool’s Day,” I drove over in the pre-dawn minutes before the gates would open officially to find Stella Giblas, our barista, standing on the street with her bicycle leaning against the gate – locked out!   How about that for a worst case scenario?  After getting her in, we were darned if we could figure out how to turn on the new lights over the entranceway.  We even panicked about whether or not we were turning on the espresso machine correctly, especially since it could be years before we ever turn it off again.  Needless to say all of this was no big deal, but it is why soft openings exist.

In the 1970’s I used to think it would be a great idea to have a combined coffeehouse, bookstore, etc, etc, place, so I actually like the ambiance and community of a coffeehouse and find it both compatible with the work and kind of fun in its own way.  Our first customers establishing the new culture of our second location were incredibly interesting.

A Parisian woman and her boyfriend who is interested in Mayan signs and permaculture were the first.  Since she had helped do the menu, she wasn’t quite a civilian, but almost one.  Three tourists who had gotten one of the flyers that my companera, my son, and I had distributed on Sunday afternoon came in.  I’ve always been a big believer in flyers, so here was proof again along with an $18.00 ticket!  A woman biked in who spoke French and was on her way to work.  One of our local librarians turned up who I had flyered yesterday.  A lawyer who does our notary work was there early, as was our electrician.  The first table was occupied by a local gardener who lives in the neighborhood.  She was chatting with an art teacher and her friend on the way to yoga class.   He looked closely at all of our plants.

Stella was on her game behind the coffee bar.  She recognized the plant guy from the paper.  Bingo!  She made some Guatemalan quesadillas, while she was waiting for the first customers, which were not only delicious but big fan favorites.  My office over looks the coffeehouse on a short balcony.  I can hear my daughter, who was the architect and designer of this space, talking downstairs.  I’m a happy man!

Now we need the crowd to multiply so we can squeeze some money from all of this love and labor.

It might be soft, but it seems like a solid start.




Underpaying Servers Cannot Be Solved by Tipping Technology

gnn-slide-show-TIPNew Orleans               Because the restaurant industry has dominated the lobbying process around past efforts to raise the federal minimum wage in the US, servers, bartenders, and others who receive tips are not paid the current minimum of $7.25 per hour as a guarantee, but have to hustle that wage from a base of $2.13.  Despite all of the calls to reduce inequality, there has not been an increase in the federal minimum during President Obama’s first six years in office, and it’s not a sure thing, but it is a very safe bet there will not be an increase in the last two years of his term.   Meanwhile campaigners, community groups, and labor unions have raised the banners for low wage workers in fast food, Walmart’s, and other bottom scraping employers to pay $15 per hour and the President has proposed raising the federal to $10.10.   Just when the dawn was darkest, the tech industry has joined with the service industry to come up with a solution for this stalemate thank goodness.  They want to make it easier for you to tip and to tip more!

You think I’m pulling your leg right?  If you think this has to be the height of hypocrisy, you are close to the facts.

It seems that this is a multi-faceted campaign of moving the responsibility for the workers to the customers while the owners shuffle and smile.  At one level, the American calculation of 15% as a fair tip for good service has suddenly, according to the wizards writing and interviewing for the New York Times, become 20%, and rising, even for small purchases in their reckoning, like a $3.00 cup of coffee.  A $3.00 cup of coffee!  We have a 100% fair trade operation at Fair Grinds Coffeehouse, but we sure would be out of business if we tried to juke a cup of Joe up to 3 bucks!

One bunch of fancies had used some tech doodad to allow customers to separate tips for the servers and tips for the kitchen.  A customer was supposed to get the notion that this was a fine and progressive thing being done by the restaurateur, as opposed to a slick move on their part to make fair pay for the kitchen the customer’s responsibility in the same way they have so long shifted the burden of low pay to the customer for the server.  There have been decisions from appropriate jurisdictions limiting the ability of owners to take the tips or direct the distribution of pooled tips, but there is no restriction on owners creating a voluntary culture of sharing with the kitchen, bus staff, bartenders, and others, which is common in busy and lucrative dining markets whether New York, New Orleans, or San Francisco.

More pernicious were all the tricks owners were playing with their new tech tools or those they were getting from the geek-get-rich-squads establishing “choice architecture” that would force the buyer into higher, semi-mandatory tips or going through a process of deliberately resetting a tip level themselves.  One trick had to do with presetting iPads used as point-of-sale registers at certain levels.  I’m not a big Apple fan, but we have had great luck converting from an old computer system to an iPad POS system, and there is a tip line when someone pays on the Square through the iPad POS, but for goodness sake, it’s not preset.   There seem to be a dazzling variety of choices for other gee haws for coffeehouses and restaurants to suck more tips out of their customers.

The Restaurant Opportunity Center has tried to get establishments to sign up to voluntarily be good employers.  Fair Grinds Coffeehouse was quick to do so when approached.  By paying the full federal minimum wage of $7.25 and pooling tips, our baristas make between $13 and $17 per hour, which is a great hourly wage rate in New Orleans.

The solution isn’t in the tech, it’s with owners paying fair wages and communicating that to their customers rather than shilling their customers and shirking their own responsibilities.

Caffè sospeso, or Suspended Coffee: A Christmas Message


Fair Grinds Coffeehouse New Orleans

New Orleans    Chaco and I go open Fair Grinds Coffeehouse, our social enterprise that supports ACORN International’s organizing in Latin America on Christmas morning. He will get there at 530AM, and I’ll trail in about 615AM. I’m the helper, and not much of that he often tells me, but we open together every Christmas morning to support the regulars. Some go to the “right track” upstairs every day in our Common Space. Others just count on us for a great cup of coffee early in the morning, and we’re about all that’s there.

Reading the New York Times before I run down, there was a great “coffee” article on the front page about a Italian custom having a revival in Naples of having an espresso and paying for a second as a caffe’ sospeso or suspended coffee for someone who needs a cup of coffee but might be short of the cash that day.

Says something about the season. Says something about coffee and great coffeehouses.

Thanks to the New York Times for what follows:

In Naples, Gift of Coffee to Strangers Never Seen



The Storico Gran Caffè Gambrinus, which honors the Neapolitan tradition of the “suspended coffee.” The practice, which boomed during World War II, has found a revival in recent years. Credit Gianni Cipriano for The New York Times

NAPLES, Italy — One azure morning in December, Laura Cozzolino arrived at her corner cafe in central Naples and ordered her usual: a dense espresso, which arrived steaming hot on the dark marble counter.

She lingered over the aroma, then knocked it back in two quick sips. But instead of paying for one coffee, she paid for two, leaving the receipt for the other — a caffè sospeso, or suspended coffee — with the bartender for a stranger to enjoy.

“It’s a simple, anonymous act of generosity,” said Ms. Cozzolino, 37, an employee of a medical device company. “As a Neapolitan who tries to restrict herself to four coffees a day, I understand that coffee is important. It’s a small treat that no one should miss.”

The suspended coffee is a Neapolitan tradition that boomed during World War II and has found a revival in recent years during hard economic times.

From Naples, by word of mouth and via the Internet, the gesture has spread throughout Italy and around the world, to coffee bars as far-flung as Sweden and Brazil. In some places in Italy, the generosity now extends to the suspended pizza or sandwich, or even books.


Receipts are left to be claimed by those who are unable to afford a cup of coffee. Credit Gianni Cipriano for The New York Times

Naples is a city well known for its grit, beauty, chaos and crime. Despite those things, or perhaps because of them, its people are also famous for their solidarity in the face of hardship.

No one here seems to know precisely when or how the suspended coffee began. But that it started here speaks to the small kindnesses that Italians are known for — and also of the special place that coffee occupies in the culture.

In a time of hardship, Italians can lack many things, but their coffee is not one of them. So it may be the most common item left at many cafes, as a gift, for people too poor to pay.

More than 90 percent of Italian families drink coffee at home, and there is one coffee bar for every 490 Italians, according to Illy, one of Italy’s leading coffee producers, and a local organization that studies food and drinks. Espresso comes in seemingly infinite forms: ristretto (strong), lungo (more water), macchiato or schiumato (with a bit of milk or milk foam), or corretto (a kick of liquor added).

Drinking one is an act rigorously performed standing at the counter for a few quick minutes. It naturally sets the passing hours of the day. It is both an intimate and a public ritual.

Many bartenders attribute a soul to the coffee-making process and take pride in knowing their customers’ preferences, even before they lay an elbow on the counter and start talking about the sun — or lack thereof — or complaining about the government.

“Coffee consumption predated the unification of Italy by more than 200 years, so the rituals and traditions around it are very ancient,” Andrea Illy, chairman of Illy, said in a phone interview. “In Naples, coffee is a world in itself, both culturally and socially. Coffee is a ritual carried out in solidarity.”

That solidarity is spreading. In 2010, an ensemble of small Italian cultural festivals gave form to the tradition of generosity by creating the Suspended Coffee Network.

The purpose was to weather the severe cuts to the state cultural budgets by organizing and promoting their own activities together. But it also started solidarity initiatives for those in need. Encouraging a donated coffee was one of them.

Now, across Italy, the bars that have joined the network display the suspended coffee label — a black and brown sticker with a white espresso cup — in their windows.

In participating coffee bars, customers might toss receipts in an unused coffee pot on the counter, where the needy can pull them out and use them. In others, customers pay in advance for an extra coffee, and the cafe keeps a list or hangs the receipts in the shop window.

As the most vulnerable increasingly feel the pinch of Italy’s long economic crisis, bars in some southern towns have started inviting customers to pay for a sandwich — or more — for those in need.


Coffee at Storico Gran Caffè Gambrinus in Naples, Italy. Credit Gianni Cipriano for The New York Times

This year, Feltrinelli, a large bookstore, encouraged clients to buy a book and leave it for destitute readers who could then go and collect it.

Likewise, in 2012, a pizzeria in Naples, Da Concettina ai Tre Santi, created the suspended pizza logo and printed it on its paper tablecloths. Each week, it manages to deliver around 15 free pizzas for the poor.

But in Naples, with its rich diversity of neighborhoods, coffee bars hold a special place as gathering points for all: senators, families with grandchildren, street artists, businessmen and beggars.

“Coffee in Naples is an excuse to dialogue, to tell stories, not like in other more hectic Italian cities,” said Bruno La Mura, one of the owners of the Spazio Nea art gallery, exhibition room and coffee shop, which has offered suspended coffees since it opened in 2012.

“Here we don’t drink coffee, we ‘take’ it, as a medicine,” echoed his business partner, Luigi Solito. “To me, the philosophy of the suspended coffee is that you are happy today, and you give a coffee to the world, as a present.”

Even before joining the Suspended Coffee Network, some Neapolitan cafes embellished the tradition on their own.

At Gran Caffè Gambrinus, a 154-year-old cafe in Naples, in 2009 the managers began displaying an old, oversize Neapolitan coffee pot, a local version of the kind in almost all Italian homes.

They leave the lid open, with explanations in six languages — and in Neapolitan — of what a suspended coffee is and how clients can contribute one by dropping a receipt inside.

Of more than 1,500 espressos it serves on average every day, about 10 are left suspended by customers, said Sergio Arturo, one of the owners. About five people come every day and stick their hands in the coffee pot and take a receipt, a number that has increased in the past year or two, he said.

Almost everybody in Naples seems to know what a suspended coffee is, though not all bartenders have served one.

In Naples’s old quarter, an area heavily visited by tourists, Caffè 7Bello serves about 1,000 suspended coffees a year, mostly to older people, migrants and the Roma, the owner, Pino De Stasio, said.

It is in the building where the 20th-century thinker Benedetto Croce once lived, on a street that is today lined with souvenir shops and pitchmen selling lucky horns made in China for a euro. That is where Ms. Cozzolino left her suspended coffee.

“I didn’t know about the suspended coffee,” said another customer that day, a mother of four from Bucharest, Romania, in flip-flops, socks and a light winter jacket, who panhandles nearby. “I just came by once, and they gave it to me, so I come back. We like coffee, too.”


Forced Labor and Human Trafficking

photoNew Orleans   At the Fair Grinds Dialogue , Stephanie Hepburn, co-author of Human Trafficking Around the World:  Hidden in Plain Sight, led us through the hall of horrors of forced labor and the little that is done about it around the world.  She and Rita Simon had amassed stories and studies from twenty-four countries to shed light on the estimated, but likely under-counted, 20.9 million victims of trafficking making for a fascinating, engaged, and profoundly depressing evening despite the good spirits of all involved.

            The first point Hepburn made was that despite the fact that when most people think about trafficking, their most vivid image stoked by movies and television, is sex trafficking, and as terrible as that is, it only represents 22% of what most count as trafficking, while forced labor counts for 78% of the almost 21 million victims.  The second point that was inescapable is that despite the fact that trafficking by definition implies movement, forced labor in Hepburn’s argument is defined by what she calls the “deprivation of freedom” or in other words the restriction of mobility, the loss of any ability to leave or flee the situation. 

            The examples are legion and certainly the caste system in India and bonded labor in that country is one of the more notorious, where literally generations of families are held in indentured servitude because of generations of debt, and there is Niger in Africa where slavery is still legal.  The predatory nature of debt though is common in many of the forced labor situations where aspiring immigrants have raised sums from family and friends seeking opportunity in North America or Europe or the Middle East, and instead find themselves working but in situations more akin to captivity with terrible living conditions and a cycle of increasing and inescapable debt with their documents and plane tickets held by their employers or, more accurately, captors. 

            In the United States such cases, when they finally emerge from “plain sight,” are often handled administratively through the Department of Labor as enforcement actions of the Fair Labor Standards Act, rather than as civil suits prosecuted by the Justice Department.  Hepburn cited some progress in recent reports by the State Department that looked not only at other countries challenges and progress in dealing with trafficking but internally at the US situations as well, which was no doubt gratifying partially because her initial interest had been provoked by the labor conditions in New Orleans in the wake of Hurricane Katrina.

            Hepburn hopes that more transparency like this will educate prosecutors and judges to take trafficking more seriously because the conditions will be more visible.  She is encouraged by several groups, like Polaris Project, that have done good work.  She cited the Palermo Protocols as progress in forging a more common definition of trafficking that might encourage better enforcement country to country.

            As she answered questions, I could sense both anger and disappointment in the room.  People wanted a happier ending or to feel that somebody, somewhere was doing more about this issue and that it would all work out better, but they weren’t hearing it from Hepburn.  This was a work in the making.   In her book, she minced no words in the conclusion that we need to be more honest about trafficking and start calling a spade a spade and see it as simply “modern slavery.” 

There’s no sleeping easily with slavery once you come to grips with the fact that it is not a thing of past, but very much part of the present.