Starbucks Owes Baristas Over $14 Million in Tips

Posted November 16, 2012 in Class Actions Labor and Employment by

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After improperly pooling the tips of baristas with their immediate supervisors for years, Starbucks must pay over $14 million to a class of the baristas who successfully sued the coffee chain in Massachusetts.

The 1st Circuit U.S. Court of Appeals ruled on Nov. 9 that Starbucks violated the state’s Tips Act by pooling tips for baristas and shift supervisors.


No Whining, Starbucks

Tips are distributed at stores weekly to individual baristas and shift supervisors in proportion to the number of hours they work. Starbucks tried to argue that it was unfair to “cut shift supervisors out of the tips pools when they spend the majority of their time serving customers alongside baristas,” according to the opinion.

The 1st Circuit slapped that argument aside, noting it was “disingenuous,” since “Starbucks is the architect of these tips pools, which flout the law and lump together eligible and ineligible employees. If there is an inequity, the fault lies with Starbucks – not with the Tips Act.”

The law’s the law, said the appeals court, and the Tips Act clearly says employees with managerial responsibilities – i.e., the shift supervisors – are not “wait staff,” the only employees entitled to tips under the law.

And despite Starbucks’ argument that the decision is “a windfall for baristas,” the court said the coffee chain has only itself to blame. “The windfall comes about only because Starbucks put in place a policy that transgressed the Tips Act, so Starbucks is not in a position to complain,” according to the opinion.


Triple the Money

The appeals court affirmed the trial court’s finding that the shift supervisors had improperly received $7.5 million in tips during the six years at issue from 2005 to 2011. With treble damages and interest to date, the plaintiffs’ lawyers at Lichten & Liss-Riordan, PC in Boston calculate the total award to come to more than $20 million.

Shannon Liss-Riordan

“Under this ruling, anyone who has worked as a barista for Starbucks in Massachusetts at any time since March 2005 is entitled to a refund from Starbucks of the amount of tips that they lost due to their sharing of tips with shift supervisors,” according to the firm.

A similar case is still pending in New York, where the 2nd Circuit U.S. Court of Appeals told the New York Court of Appeals it must sort out how to apply that state’s laws to the sharing of tips between baristas and their managers.

The baristas’ lawyer Shannon Liss-Riordan told the Boston Globe that the ruling affects about 11,000 baristas who worked at Starbucks between 2005 and 2011. “Just because they’re Starbucks, they can’t ignore the law that protects Massachusetts workers,” Liss-Riordan said.


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