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Steve Coomes: Server's smear campaign over Lynn’s Paradise Café’s ‘bank gate’ is ridiculous

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(Editor’s Note: we clarified Coomes’s language to make it clear he is discussing the legality and commonplace nature of “bank” arrangements in general, not the specifics of the employment dispute in question.)

Leila DiFazio had been a server for 11 months at Lynn’s Paradise Café before being sacked Jan. 2.

The cause?

Refusing to follow LPC’s new policy stating all servers had to carry a $100 cash “bank” to work each day for the purposes of tipping assistants such as bussers and bartenders.

DiFazio thought the amount was too much to ask. So much that she wrote in a post on WLKY 32’s Facebook page (hoping a reporter would read her story and skewer Lynn’s), “Anyone who can afford to have one hundred dollars cash on them at any given time probably doesn’t need to work as a server.”

In speaking to local blog Eater Louisville, Lynn Winter, founder and owner of the quirky and nationally famous café, said the increased “bank,” as it’s called in the biz, was instituted due to the continued rise in credit card tips, which leaves both servers – and sometimes the restaurant itself – too low on cash to give servers and assistants the amount in tips they’re owed when they finish their shifts.

In other words, if the bulk of a day’s sales are transacted with credit cards, there might not be enough cash to go around when tipping is done. Happens all the time.

That leaves restaurateurs facing some options: 1. Keeping a cash buffer on hand for paying servers and assistants cash that is traditionally the mainstay of their income; or 2. Crediting those credit card tips directly to paychecks.

Some restaurateurs I talked to about the issue — and shocker, no one wants to talk on the record about this — keep the cash buffer. They know servers like cash in hand, so that’s how they pay them. Others move credit card tips to paychecks. Both systems seem to work fine.

Why this isn’t done to pay servers assistants as well? The general answer is, “We just have always done it this way.”

And if it works, why mess with it?

That’s what Tom Kohler thinks. The former CFO for Rally’s Hamburgers, Kohler now runs Premier Accounting Services, which specializes in managing the books for restaurant companies. Suffice it to say, he knows the rules and knows how restaurants follow them.

Kohler thought the $100 bank standard was a little high, but said he saw no wrongdoing in mandating it.

“I’m surprised Lynn’s doing it that way,” he began, “but those servers — and I think Lynn knows this — will certainly see that for what they’re doing, they’re making far more than they would for the same hours they’d work in another job. … I know they can set aside $100.”

Problem is, many won’t. Too many, as Kohler pointed out, choose not to manage their money well.

Could Winter use a cash buffer to ensure the house pays its servers assistants? Based on the success of Lynn’s, one would assume so.

But could any server worth his or her salt amass $100 to play the game and keep a job? At a place with the traffic of Lynn’s, I have no doubt.

While DiFazio asserts anyone with $100 in his pocket doesn’t need to work as a server, I say any server who can’t come up with $100 cash quickly isn’t a good server or is a terrible money manager or just got robbed.

Too many of them love the work because it gives them cash in hand. I waited tables, too, so I know the false sense of quick “wealth” that comes with ending a shift with a wad of cash.

I also know what it’s like to go home and put the money in the drawer for a few days until you can go to the bank and get it out of your hands. Had I been asked to carry a $100 bank to play the game by the new rules, I might have groused, but I’d have gone to the bank and withdrawn it.

In attempting to cover the issue, Eater Louisville implied that  the entire practice of “the bank” is[KH1]against the law.

Wrong.

An anonymous post to the site linked to KRS 337.065 as proof that tipping can’t be mandated by restaurants such as Lynn’s. Problem is, the post points only to sections 1 and 3 of the law, not to section 4, which lays out the terms under which such tip sharing programs can be operated as voluntary arrangements between restaurants and their employees.

I am not familiar with the exact specifics of how Winters established her “bank” program, or with DiFazio’s firing, for that matter. But the fact is EVERYONE in this business plays by section 4. It’s simply the way it’s done: Servers get tipped, and they are expected to be honest in how they tip their assistants and bartenders. It’s a long-established and happy relationship based on the trickledown effect.

So should the whole thing fall apart because servers need to adapt to an adjusted standard?

I’m not saying Winter’s right or wrong — and it’s certainly not illegal—I’m merely saying it’s not that onerous a demand in a profession where full-time servers make between $20,000 and $50,000–or more–a year.

And if it is, go serve tables somewhere else, Ms. DiFazio. Good restaurants are always looking for good help. Lynn’s isn’t the only busy spot in town.

And for what it’s worth, customers who think that tipping cash on credit card charges allows servers to take that income without reporting it are just as stupid as a server who doesn’t report it.

Not only are you saying with a wink, “Here’s one for you, but not one for Uncle Sucker,” you’re risking they won’t share that tip with their assistants.

You’re also saying, “I know I have to pay taxes, but I have no problem with you cheating.” And that is illegal.

In talking to restaurateurs about the Lynn’s debacle, every one of them said they have servers who aren’t reporting all their income this way.

“I have no choice but to report my sales, but my servers can skip reporting their tips? How’s that fair?” one said. “I pay taxes in abundance, so I don’t have much patience for servers who won’t set aside a little money over the course of the year so they can pay taxes at the end.

“Too many of them get into this business for the cash and then they live hand-to-mouth. It’s absurd.”

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