Appeals Court Overturns Starbucks Tip-Jar Ruling


Los Angeles—An appeals court in California overturned a decision that had given Starbucks employees the right to keep the entire amount in their tip jars.

The baristas had formerly brought a class-action suit, on behalf of 120,000 former and current employees, against the coffee shop chain. They accused the company of improper tip pooling, by allowing shift supervisors to have a percentage of the money from tip jars. The entry-level, part-time and hourly employees alleged that the company was permitting this practice in order to subsidize the supervisors’ pay, instead of giving them higher wages.

A San Diego County judge had awarded the baristas nearly $90 million in restitution following a bench trial, ruling that Starbucks was in violation of the state’s Unfair Competition Law. The company was also barred from continuing the policy of tip distribution among supervisors and hourly employees alike.

The Fourth District Court of Appeal reversed this decision, however, on the basis that Starbucks shift supervisors are not salaried employees, nor do they have the power to hire, fire or otherwise discipline baristas. In fact, the court ruled, the supervisors perform all the duties of a barista, including interaction with customers and coffee-drink preparation, along with some additional tasks. For that reason, stated the decision, they ought to share equally in the tips.

The court said that Superior Court Judge Patricia Cowett had ruled wrongly based on case law and legislative law that covered the way employers allocated tip pools. One of the statutes she had used in her decision prohibited owners, managers and supervisors from sharing employee tips. The appeals court said that because the supervisors at Starbucks are also baristas who perform customer service tasks, they are not covered under this statute.

“There is no (legal) authority prohibiting an employer from allowing a service employee to keep a portion of the collective tip, in proportion to the amount of hours worked, merely because the employee also has limited supervisory duties,” the court wrote. The court ordered the trial judge to enter judgment in favor of Starbucks.

Plaintiffs’ attorney David Lowe said that the baristas will take the matter to the California Supreme Court.


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