Two major restaurant associations are demanding WorkSafe BC immediately stop enforcing a gratuity policy they say contradicts federal tax rules and is hurting an industry already facing record bankruptcies.
The British Columbia Restaurant and Foodservices Association and Restaurants Canada say WorkSafe BC quietly implemented a policy requiring all verifiable gratuities to be treated as assessed payroll, creating confusion for employers who must also follow Canada Revenue Agency rules that define gratuities differently.
The policy has led to surprise audits that result in surcharges and penalties for restaurants, forcing owners to choose between conflicting federal and provincial regulations on how to handle tips.
Policy implemented without consultation
WorkSafe BC implemented the directive without consulting the industry or providing notice to restaurant owners, according to the associations. Many restaurants only learned about the policy when they were audited.
“There has been no notice to the industry, no training, and no orientation,” said Ian Tostenson, President and CEO of BCRFA. “Restaurants are being audited and fined for an unfair confusing WorkSafe BC gratuity policy directive they were not even unaware of. This is unfair-and reckless.”
The Canada Revenue Agency considers credit card gratuities as direct tips that should be paid out in cash at the end of each shift and not included in employer payroll records. WorkSafe BC’s policy requires employers to record all verifiable gratuities as controlled tips and include them in assessed payroll.
Industry faces mounting pressures
The enforcement comes as British Columbia’s restaurant industry struggles with multiple challenges. Restaurant bankruptcies hit record levels in 2024, and more than half of the province’s restaurants are unprofitable as they deal with rising operating costs, reduced consumer spending and labour shortages.
“Restaurants are between a rock and a hard place on gratuity policies,” said Mark von Schellwitz, Vice President Western Canada for Restaurants Canada. “They need to either comply with federal CRA direct gratuity rules where credit card gratuities are to be paid out in cash at the end of every shift and not be included in employer payroll records or comply with WorkSafe BC’s gratuity policy that requires employers to record all verifiable gratuities as controlled gratuities and include them in assessed payroll. This puts restaurants into an impossible position of determining which contradictory gratuity policy to comply with.”
The audits are costing restaurants thousands of dollars in additional payroll expenses, adding to their financial burden during an already difficult period for the hospitality sector.
Associations seek policy reset
Both organizations have been meeting with WorkSafe BC for over a year, asking for the policy to be paused and reviewed. They are now jointly calling for an immediate halt to audits and enforcement action, and want WorkSafe BC to conduct full consultation with industry stakeholders.
The associations want a new policy that aligns with CRA tipping rules and doesn’t create additional administrative burden or labour costs for employers.
“We are calling on WorkSafe BC to work with the hospitality industry as partners to reset their gratuity policies to make them consistent, fair and workable, for all employers with employees that earn gratuities,” said both Tostenson and von Schellwitz.
Restaurants Canada represents the country’s $120 billion foodservice industry, which employs nearly 1.2 million Canadians. The BCRFA describes itself as British Columbia’s largest restaurant industry organization.
