Starbucks managers have gone to court to try and get take a share of the cash left by customers in barista’s tip jars.
At the international coffee chain only baristas and shift supervisors get a share of the tips, but salaried assistant managers are now seeking a share of the gratuities.
The case, before New York's highest court, could have broad consequences for the state's hospitality workers and, ultimately, employees at the coffee chain's thousands of U.S. retail stores.
A federal appeals court has asked the
state Court of Appeals to interpret New York labor law and its
definition of an employer's 'agent,' who is prohibited from tip sharing,
in connection with two lawsuits against Starbucks.
The
federal court is seeking answers on two specific questions: What
factors determine whether an employee is an agent of the company? Does
state law permit an employer to exclude an otherwise eligible
tip-earning employee from sharing in such a tip pool?
On one side are hourly-wage baristas who serve customers and share tips weekly based on hours worked.
On the other side are salaried assistant managers who want a share of the gratuities. In between are shift supervisors with limited management responsibilities who mainly serve customers, get paid hourly and also share tips.
Hospitality industry groups say the state court decision will be felt far beyond Starbucks, immediately affecting 42,000 New York businesses statewide and a quarter-million hospitality industry workers in New York City alone.
Attorney Shannon Liss-Riordan,
representing the baristas, said the shift supervisors should also be
excluded from the tip jar since they make work assignments and have
authority over baristas and therefore qualify as company agents.
The supervisors also coordinate breaks and receive higher wages, she said.
Attorney Adam Klein, representing the assistant managers, said they spend most of their time serving customers and deserve tips. They lack the authority to hire and fire staff and therefore should not be considered company agents under the law, he said.
Company attorney Rex Heinke defended the existing tip-sharing policy, saying baristas and shift supervisors divide up the cash jar weekly because they essentially provide the same customer service while assistant store managers are excluded because they have a different role and 'real power' over the others, including scheduling and recommending hiring and firing.
The employer's responsibility is to come up with 'a reasonable, fair system' for sharing pooled tips, and the company does have authority to exclude employees deemed eligible under state law, he said.
'Why, if they're eligible, do you have the authority to say they can't get it?' Chief Judge Jonathan Lippman asked.
'You can't take that tip money. You're kind of the trustee of that tip money. Why should you have that authority?'
The practical reality, which the state labor department realized with its latest regulation, is that someone has to decide that allocation, Heinke said.
There's nothing in the statute that gives the department that power, and it's left to the employer, he said.
Seattle-based Starbucks has nearly 18,000 retail stores in 60 countries. In April, it reported $3.6 billion in quarterly revenues.
Starbucks had 413 company-owned stores in New York at the end of its last fiscal year. Company spokesman Zack Hutson said the tip policy is applied consistently across the U.S., though not globally because laws differ in other countries, he said.
One federal judge concluded shift supervisors lack the broad managerial authority to be classified company agents. Judge Laura Taylor Swain also said the law doesn't require companies to include all eligible employees in a tip pool, while acknowledging questions remained on the New York eligibility of assistant managers.
At the international coffee chain only baristas and shift supervisors get a share of the tips, but salaried assistant managers are now seeking a share of the gratuities.
The case, before New York's highest court, could have broad consequences for the state's hospitality workers and, ultimately, employees at the coffee chain's thousands of U.S. retail stores.
Decision: Baristas at Starbucks have begun a
legal battle against their managers and the company over who is entitled
to the cash tips coffee customers leave
On one side are hourly-wage baristas who serve customers and share tips weekly based on hours worked.
On the other side are salaried assistant managers who want a share of the gratuities. In between are shift supervisors with limited management responsibilities who mainly serve customers, get paid hourly and also share tips.
Hospitality industry groups say the state court decision will be felt far beyond Starbucks, immediately affecting 42,000 New York businesses statewide and a quarter-million hospitality industry workers in New York City alone.
Changes: Hospitality industry groups say the
state court decision will be felt far beyond Starbucks, immediately
affecting 42,000 New York businesses statewide and a quarter-million
hospitality industry workers in New York City alone
The supervisors also coordinate breaks and receive higher wages, she said.
Attorney Adam Klein, representing the assistant managers, said they spend most of their time serving customers and deserve tips. They lack the authority to hire and fire staff and therefore should not be considered company agents under the law, he said.
Company attorney Rex Heinke defended the existing tip-sharing policy, saying baristas and shift supervisors divide up the cash jar weekly because they essentially provide the same customer service while assistant store managers are excluded because they have a different role and 'real power' over the others, including scheduling and recommending hiring and firing.
The employer's responsibility is to come up with 'a reasonable, fair system' for sharing pooled tips, and the company does have authority to exclude employees deemed eligible under state law, he said.
'Why, if they're eligible, do you have the authority to say they can't get it?' Chief Judge Jonathan Lippman asked.
'You can't take that tip money. You're kind of the trustee of that tip money. Why should you have that authority?'
The practical reality, which the state labor department realized with its latest regulation, is that someone has to decide that allocation, Heinke said.
There's nothing in the statute that gives the department that power, and it's left to the employer, he said.
Seattle-based Starbucks has nearly 18,000 retail stores in 60 countries. In April, it reported $3.6 billion in quarterly revenues.
Starbucks had 413 company-owned stores in New York at the end of its last fiscal year. Company spokesman Zack Hutson said the tip policy is applied consistently across the U.S., though not globally because laws differ in other countries, he said.
One federal judge concluded shift supervisors lack the broad managerial authority to be classified company agents. Judge Laura Taylor Swain also said the law doesn't require companies to include all eligible employees in a tip pool, while acknowledging questions remained on the New York eligibility of assistant managers.
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