Starbucks Sued by Baristas, Managers over Tip-Sharing

Posted October 29, 2012 in Labor and Employment by

Image: marcopako

That little plexiglass box you throw your change in after you pay for your latte is causing a big ruckus. In two separate class action suits, baristas and managers are fighting over the tip jar, and they now have to wait and see what the New York Court of Appeals has to say about who gets the change – which could add up to a lot of money.

Should Starbucks baristas have to share their tips with their shift supervisors, who you also see behind the bar but who have more managerial duties? And should the assistant store managers – who don’t serve customers at all – get a cut of the action?

It’s come down to a fight in the 2nd Circuit U.S. Court of Appeals, which punted the question to New York’s highest court on Oct. 23

 

Application of New York Law Unclear

As the law stands at the moment, Starbucks’ tip-pooling policy is still in effect, under which baristas must share tips with the shift supervisors, who also take orders behind the counter but have additional duties. Assistant store managers are barred from the tip jar.

In their class action, which was dismissed by the lower federal court, the baristas argued that shift supervisors are Starbucks “agents,” who, under state law, can’t accept tips. In the assistant managers’ class action, also dismissed, they said they are not “agents” and are therefore eligible to accept tips, since their customer service is part of what generates tips.

The 2nd Circuit wants the New York high court to define “agents.”

 

Restaurants Ignoring the Law

“Our case challenges the inclusion of shift supervisors in the tip pool, because, like the assistant managers and managers, they are supervisory employees, and so under New York law, they should receive all of their pay directly from Starbucks, not from the tip pool,” says Shannon Liss-Riordan, a lawyer with Lichten & Liss-Riordan, PC in Boston, who represents the baristas.

Shannon Liss-Riordan

Liss-Riordan, who has successfully sued restaurants in Massachusetts to enforce tip laws in order to protect waitstaff from managers horning in on their tips, says the amount at stake “will be in the millions.”

Despite the 2nd Circuit’s confusion, Liss-Riordan says New York law is clear that “agents” includes managers, supervisors, foremen, “and any other person employed acting in such a capacity.”

“This has been an issue in the restaurant industry for a long time, frankly because so many restaurants simply have ignored the law,” she explains.

 

Managers Barking Up the Wrong Tree

As for the assistant store managers’ case, Liss-Riordan says it “has no merit at all.”

“New York law expressly provides that supervisors and managers cannot share in tip pools,” she says. “We believe that supervisors and managers should be paid for their efforts, including extra pay for the additional responsibilities they have. But that pay should come from the employer, not the tip pool, which the Legislature has reserved for the non-supervisory employees.”

“Starbucks can afford to pay more to its shift supervisors and assistant managers; it doesn’t have to take that money out of the pockets of its lowest paid employees, the baristas,” Liss-Riordan continues. “Based on our estimates, it would cost Starbucks approximately $2 per hour more to pay its shift supervisors to make up for their not getting paid out of the tip pool.”

 

Bottom Line for Customers

If Starbucks has to pay managers more, will customers have to pay more for those delicious pumpkin spice lattes?

“The outcome of the case should not affect consumers,” maintains Liss-Riordan. “If we win, consumers should be happy to know that the tips they are leaving in Starbucks tip jars are going to pay the lowest wage workers, the baristas, and that Starbucks is fully taking care of the pay for its employees whom it has given supervisory and managerial authority.” 

“I would think that Starbucks is doing well enough that it can pay its shift supervisors an extra $2 per hour, continue to make huge profits, and not have to raise the cost of our lattes.”

 

Do you think Starbucks should pony up and pay its managers more so that its baristas can keep all the change in the tip jar? Start a conversation below.

 

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