Tips Are Not Part of Wages, Labor Court Informs Cafe

The Labor Court ruled this week that employees who receive tips are still entitled to a salary and benefits in a lawsuit filed by two waitresses.

"Tips paid to employees by customers are not part of the salary they deserve," Judge Alia Fogel said. "The tips do not exempt the employer from his obligation to pay the employee his full salary in such a way that it will not fall below the minimum wage."

Fogel ordered the cafe pay the two NIS 120,000 in back wages.

The two, Mira Laloush and Michal Reiss, were employed by Ramat Gan's Cafe America from the end of 1996 until the middle of 1999. They claimed that an employee-employer relationship existed, but nevertheless, they did not receive any of employee rights or social benefits such as vacation pay and transportation.

The two women said the only payment they received during the entire period was customer tips. "The amount of the tip is dependent on the customer's will, and therefore, is not considered salary," the two claimed.

Cafe management rejected the claim that the waitresses were entitled to a salary, saying no employee-employer relationship existed, adding that even if it did exist, then the tips received more than covered the minimum wage they were required to pay. The management also claimed that the two never requested benefits during their employment period.

The judge said that Cafe America's manager forced the waitresses to sign a declaration that they would not receive a salary or any other payment, and that an employee-employer relationship did not exist between the sides.

However, Fogel decided that such a relationship did exist. "The cafe is a place that provides restaurant services to its customers, and the waitresses' work is an integral part of its functioning. The plaintiffs, as waitresses at the cafe, were part of its organizational structure. They did not have their own business providing waitressing services, and it is impossible to view them as an external function to the cafe," Fogel wrote. Therefore, the judge decided that the two were cafe employees, and were entitled to all the rights granted to workers by law, including minimum wage.

The judge added that the purpose of the minimum wage law is to guarantee an honorable level of existence. Even though waitressing positions are often manned by young people who often view the jobs as temporary, this strengthens the need to protect such workers, who may not insist on their legal rights, the judge wrote. Under no circumstances should the employers be allowed to act in a way that completely violates the laws meant to protect such workers.

The judge said that the cafe's management did not issue any salary slips, report worker salaries as business expenses, and insure the employees.