Tudor Room tip policy questioned

Tim Solon had worked at the Indiana Memorial Union’s Tudor Room for more than a year when earlier this month he was told to sign a new tip policy that, according to his calculations, would cost him about $3 an hour in wages. Solon said he questioned his supervisor on the new procedure, who told Solon that he could either sign the policy or quit. Solon quit.\nThe new policy took effect Sept. 24, and at least two employees have quit as a result. Still, Steve Mangan, general manager of IMU Dining Services, maintains the plan will equalize pay and make the Tudor Room more team-oriented.\nThe new policy states that two-thirds of tips given to employees of the Tudor Room will be pooled and distributed depending on the percentage of time worked by all catering service employees. The other one-third will be taken by dining services to help offset certain costs related to an increase in employees’ hourly wage, which has gone from $2.15 to $6.50, said Thom Simmons, associate executive director of the IMU.\n“To a certain extent, it helps to offset the cost of the $4.35 wage increase,” Simmons said. “It also pays for the administrative cost of processing payroll.” \nThis entails the physical labor of a supervisor computing all of the tips given to servers by credit card, he said. \nBut even before the new policy took place, there were at least some administrative costs associated with processing employee pay. Because of this, other areas of the IMU, which were once responsible for covering these administrative charges, will no longer carry the costs as about 33 percent of servers’ tips will now be taken for these expenses. \n“I had a lot of questions,” said sophomore Lexi Siamas, who also quit over the policy. She and Solon talked to managers and were unhappy with the answers, so they called the Indiana Department of Labor, who in turn contacted Mangan.\nWhen asked initially, Mangan told the Indiana Daily Student there was nothing going on with the Department of Labor with regard to Dining Services’ new policy. However, he later admitted he had been contacted by a Department of Labor investigator. \nAfter talking with Mangan, that investigator told Siamas in a voice mail that the new policy was legal because the increased compensation complied with Indiana minimum wage standards.\nWhile several Department of Labor officials and legal experts said the new policy seems “shady,” the general consensus from representatives of the Department of Labor is that the policy is legal.\n“The employees are receiving over minimum wage,” said Scott Allen, an inspector at the Department of Labor. “So, quite frankly, the company doesn’t have to let them keep any of their tips at all.”\nBecause the Tudor Room is no longer claiming a tip credit, the employees are now qualified as “hourly employees,” Allen said. \nBut the new procedure is a “close question,” said David Gray, an Indianapolis attorney specializing in labor and employment law.\n“Under Indiana law, you can only deduct from employees’ wages in very limited conditions,” Gray said. “They aren’t exactly entitled to it, but they aren’t really violating \nanything either.”\nBoth Mangan and Simmons said the new policy will benefit the Tudor Room in the long run.\n“We have a goal of improving service and equalizing pay,” Mangan said. “We’re doing this to encourage a team effort.”\nWith all of the tips being pooled, Mangan said the employees will be more likely to help out their co-workers, which will lead to an overall improvement in service. \nStill, one current Tudor Room employee, who wished to remain unnamed for fear of retribution, said the new policy makes sense from an overall service dynamic, but leaves him little reason to go above and beyond when serving customers.\n“The policy does make sense,” the employee said. “But at least for me, the motivation to hustle is almost gone.”\nDespite the significant increase in wage and the tip pooling, Simmons said average hourly earnings will probably stay about the same. For the months of January to June 2007, servers earned about $8.43 in wages and non-cash tips, according to an IMU report.\nSolon said he figured he would earn about $3 less per hour when the policy took effect, but the current Tudor Room employee said since he only works one shift a week, he doesn’t think the new policy will affect him much.\n“If I was working three to four times a week, it would definitely bother me,” the employee said. “I wouldn’t have that – I would quit.”\nEssentially, the new policy will raise earnings for servers who in the past earned less in tips, while it will diminish income for servers, like Solon, who earned above the restaurant’s average in gratuity. \nAdditionally, the new policy will mostly benefit full-time employees, who work about 40 hours a week compared to students who generally work between 10 and 20 hours each week, Solon said. These full-time servers are usually not students and make up only a small number of all Tudor Room employees, Mangan said.\n“The way I figured it out based on the hours that I was working and the hours that everybody else was working, I would only be making about 4 percent of the tips I earn,” Solon said. “That leaves me with $6.50 an hour plus the change I get from the tip pool.” While Solon said he realized potential repercussions from the procedure, he believed many Tudor Room employees did not completely understand how the policy would affect their pay. \nYet for Solon, the deal was simply not worth it.\n“The Union is becoming a less and less student-run and student-friendly organization,” he said, saying the Tudor Room seems to now favor non-student full time employees as \nan example.\nStill, Simmons said this new policy will benefit the restaurant as the IMU continues to look to the future. \n“The Tudor Room is not really a money maker for the Union,” Simmons said. “But it is a part of IU’s history and tradition – it has a reputation on campus.”