It’s not just Tim Hortons, apparently. Employees at the popular breakfast chain Sunset Grill say they’re being penalized by their employer for Ontario’s new minimum wage increases. According to Sunset Grill servers, the company’s new tip pooling policy might cancel out that increase altogether.

The policy, which previously charged wait staff four percent of the diner’s bill (before tax), was updated as of January 1 to charge them five percent, according to an internal memo obtained by VICE Money.

“With this increase, it’s like a double-whammy for us,” said one server, who asked to remain anonymous. “It’s like we don’t even get a wage increase at all.”

Tip pooling, where servers pay a portion of their day’s tips to support staff (i.e. bussers, dishwashers, cooks, and hosts/hostesses), is common in the restaurant industry. Ontario’s Protecting Employees’ Tips Act, passed in 2016, specifies restaurant managers can “withhold or take an employee’s tips or other gratuities,” as long as they’re being redistributed to all employees.

Though servers can (and typically do) earn more than their non-serving peers, they can potentially lose money when diners don’t tip. The amount of the tipping pool clawback isn’t usually based on how much those servers earn in tips for the day, but the pre-tax amount of the diner’s bill.

For example, if a breakfast for two costs $30 before tax, a Sunset Grill server would be on the hook for $1.20 before the new rules took effect. Now, with a 25 percent increase in their tipping pool clawback, the same server would have to pay $1.50 to the pool.

The employees interviewed by VICE Money emphasized their $2 hourly minimum wage increase ($12.10 per hour, up from $10.10 per hour for servers), is, for the most part, going right back to the increased tipping pool.

“I probably average $150 total (in tips), per day,” said one server. “But if I was giving back $50 to the pool, I’m taking home $100. Now I’m giving back $65 or $70 per day, but my tips haven’t gone up.”

Given a full-time schedule of 35 hours, the new minimum wage means a pay increase of $70 per week. But an additional clawback averaging $60-70 for that same time period means the wage increase only exists on paper.

“We are not opposed to tipping out,” the server said. “But they are taking roughly $1,500 a week [in total] from us and what we know for sure is they are tipping out $700-$800. So even before the unforeseeable, [where] was our money going?”

In the internal memo given to VICE Money by a Sunset Grill server, the restaurant’s head office in Mississauga, Ontario singles out the minimum wage increase as a factor that “will make the restaurant industry especially vulnerable to employee layoffs and potential bankruptcy if steps are not taken to help offset these additional costs to restaurant owners.”

Sunset Grill's head office memo on Ontario's minimum wage hike

The steps include price increases for menu items, as well as the one percent increase in tip-out pooling fund.

“The purpose of the above-noted increase in the tip-out fund is to encourage a team effort of service as non-serving staff play a large role in the overall service of our customers (seating, preparing, cooking, cleaning),” the memo says.

“It is a tangible fact that the amount of gratuities servers receive is by far more compensation than support staff, and other non-serving staff. With the proposed increases in minimum wage, serving staff will also be earning more on an hourly basis.”

Sunset Grill is increasing its servers' tip out fund rate by 1%

What's not clear from Sunset Grill's head office memo is why the tip-pooling clawback would go up on the back end, if the restaurant is already increasing its menu prices on the front end. Or, for that matter, what relation the minimum wage increase even has with tip pooling, given the practice is not allowed to subsidize employee wages, and all restaurant staff will benefit from the increase in minimum wage.

When contacted for comment, there was no reply from the Sunset Grill head office in Mississauga (it is closed for the holidays until January 8). A manager at the Bloor and Runnymede location — which is not a franchise, but one of Sunset Grill’s original locations — refused to specify how much was being collected from employees. Another manager, at the Humberview franchise in Etobicoke, would not specify whether employees were given clear instructions as to how much was being collected and distributed. “I have to go,” she said. “This is too much right now.”

“The employees handle our tipping pool,” said Robert, who manages the Sunset Grill at the Wellington Street location in downtown Toronto. “It is signed off by a designated employee, and we keep an account of what’s collected and how it’s distributed.” When asked why the tipping clawback was increased, he pointed to the directive from Sunset Grill’s head office.