Business - Wednesday, July 1, 2009 8:09 - 0 Comments

Starbucks wins reversal of the $100 million tips verdict

Starbucks Corp. won a major victory last month when a California appeals court reversed a ruling that had ordered the coffee giant to pay more than $100 million in restitution for allowing shift supervisors to share baristas’ tips. The class-action lawsuit was brought on behalf of more than 100,000 current and former baristas in 2004 by former barista Jou Chau, who complained that shift supervisors were illegally getting a cut of employee tips. San Diego County Superior Court Judge Patricia Cowett ruled in favor of the baristas last year after a bench trial and awarded $86 million in restitution plus about $20 million in interest. Starbucks called the decision “fundamentally unfair and beyond all common sense and reason.” It appealed the decision.

The State Court of Appeals in San Diego reversed the trial court’s ruling, saying that the original decision was improperly based and that supervisors at the nation’s largest coffeehouse chain “essentially perform the same job as baristas.” The Court said in the decision:

We conclude the trial court erred in ruling that Starbucks’ tip allocation policy violated California law. The applicable statutes do not prohibit Starbucks from permitting shift supervisors to share in the proceeds placed in collective tip boxes.

It was reported that lawyers for the baristas will appeal the decision to the California Supreme Court. David Lowe, one of the lawyers for the baristas, had this to say:

Up to this point, every court that has addressed this issue has found that an employer cannot pay supervisors from a tip pool. This is the first case that goes in a different direction. We will be looking to the California Supreme Court to fix this error.

Lowe, of San Francisco law firm Rudy, Exelrod, Zieff & Lowe, said Section 351 of the state labor code states that an employer or agent can’t take or receive any part of tips left for employees. The legal definition of an agent, he said, is “anyone who has authority to supervise, direct or control workers.”

Starbucks had argued that its supervisors spend most of their workdays — as much as 95% — performing the very same jobs as baristas, including making coffee and taking orders. They say that, although supervisors have some authority to supervise or direct baristas, they can’t enforce those directions and can’t hire, discipline or terminate them. At a Starbucks location in Los Angeles, baristas and shift supervisors work side-by-side to serve customers, according to Tameko Aubry, a supervisor, who worked as a barista for five years. Ms. Aubry had this to say:

We do the same thing the baristas do. That’s why we supervisors think we should get tips too. . . . If they took the tips away, I would have to work extra hours or get another job.

On average, Ms. Aubry said supervisors make about $3 more an hour than baristas do. Money collected in tip jars is put into safes at each Starbucks and apportioned weekly to eligible employees based on the number of hours they work. It was reported that the average tip distributed to baristas and supervisors last year was $1.71 an hour. It would be interesting to see what position Starbucks would be taking if the case was one involving a supervisor in an “overtime” lawsuit.

Source: Los Angeles Times