Judge Offers A Tip To Starbucks - Keep Your Managers' Mitts Out Of The Tip Cup
MayorBob.
Posted to Legal on Sun Mar 23, 2008 at 03:40:22 AM EST (promoted by Acefantastik). RSS.
Should salaried management be splitting tips with their wage slaves?
Tip cups are on the counter of every Starbucks. Many of us toss spare change into the cup as appreciation to the baristas for jobs well done. We walk out of the store not really knowing how the tips are distributed nor how much money gets put in those cups. Figuring out how much money was in those cups and how it got split up was the job of one California Superior Court judge. For Starbucks, the tip split has become a multi-million dollar headache as the judge told the company they needed to kick in a whole bunch into the tip jars.
The case which began as a single complaint by a San Diego barista in 2004 turned into real money when it was granted class action status in 2006. That's real money as in (US)$86.7 million plus interest (for a projected total of more than $100 million). That, in the determination of Judge Patricia Yim Cowett, is how much of the tip money ended up in the pockets of Starbucks shift supervisors between 2000 and 2008. This decision followed Cowett's decision last month that supervisors are not employees eligible for tip income and that the company was liable for allowing them to share in the tip shares. Cowett ruled that the company had violated state labor code 351 which states "no employer or agent" was allowed to partake of any tip or gratuity left by a patron.
The monetary payout will go to an estimated 120,000 baristas who constitute the class. Starbucks spokesperson Valerie O'Neil said the decision is "not only contrary to law, it is fundamentally unfair and beyond all common sense and reason." O'Neil said that Starbucks supervisors "deserve their fair share" of the tips and the company plans to appeal the ruling. Plaintiffs attorney David Lowe said that "Starbucks has lots of other ways it can compensate shift supervisors ... but the money has to come from Starbucks, not from the [tip] pool" and that the plaintiffs were not insisting that supervisors had to repay the tip money they collected from the shares.
Fortune's James Ledbetter observes that $100 million represents one quarter of Starbuck's operating profit which means they'll be arguing this in appeals court. But Ledbetter believes that a company like Starbucks with a self-professed PR problem would be urged to "make this go away." Public reaction to this case varies. There are those happy that Starbucks is being made to obey the letter of the law to those who question the letter of the law, in that supervisors are basically "baristas with a little more authority", to concern that this decision will spark other lawsuits against the plethora of other stores which allow their supervisors to dip into the tip cup. The decision only affects Starbucks in the state of California.
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