Starbucks Barista Tip Claim Reversed By California Supreme Court

An Interesting Distinction

Posted on 04-Jun-09 by The Timekeeper

I’ve written before about tip pools and how it can be illegal to force tipped employees to share their tips with supervisors or managers. There was a big class action case out in California awhile back where Starbuck’s baristas were awarded something like $86 million because they claimed they were forced to share their tips with shift supervisors, who they considered management employees.

Well, the California Supreme Court has reversed that decision. And apparently the issue turned, at least in part, on how the tips were collected.

See, in most cases a service employee will receive a tip individually. Maybe the patron will add it to the total when paying by credit card, or they’ll leave some money on the table, or hand it directly to the server.

Now, traditionally, servers will share those tips with others involved in providing service to the customers — bartenders, busboys, runners, hosts/hostesses and so forth. Smart servers recognize the support these other people provide for the customer experience — and their power to cause a negative customer experience if they get the idea the server is “holding out” on them — and share their tips equitably. In some places, there’s a tip pool that all the servers contribute to, which then gets shared with all those in the line of service.

What the law says can’t happen is that management can’t require servers to hand over part of their tips to management itself. If someone isn’t part of the direct chain of service, they can’t claim part of the tips.

So why was it OK for the shift supervisors to get part of the Starbuck’s tips?

Turns out, the tips at Starbuck’s aren’t given to the individual servers. Rather, there are “tip boxes” out on the counter. So the court ruled the tip pool law didn’t even apply.

Beyond that, the court found that there was not an issue with sharing the tips with shift supervisors, because those supervisors also provided direct customer service, only performing supervisory duties for part of their work time:

There is no decisional or statutory 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.

So, forcing employees to share individual tips with management = bad. Splitting communal tips among all employees who provide customer service (even if some of them only provide that service for part of their work time) = OK (at least in California).

If you’re interested, you can read the Court’s complete decision here (PDF document).

An Interesting Distinction

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