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Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Tuesday, November 26, 2013

Starbucks Managers Get to Share in Tip Pool, Says District Court

TipOn November 21, 2013, the U.S. Court of Appeals for the Second Circuit decided  Barenboim v. Starbucks Corp., a case brought by a class consisting of Starbucks baristas who challenged a company rule that forces them to share tips with shift supervisors.  
 
Plaintiffs contended that the District Court had erred in refusing to construe New York Labor Law § 196-d to prohibit Starbucks from distributing pooled tips to shift supervisors becasue such Starbucks employees are "agents" as that word is used in the statute. Section 196-d provides that  “[n]o employer or his agent or an officer or agent of anycorporation, or any other person shall demand or accept, directly or indirectly, any part of thegratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.”  The Second Circuit affirmed the District Court's grant of summary judgment in favor Starbucks.  
 
The case had previously been certified to the New York Court of Appeals, which rejected plaintiffs' argument that § 196-d bars any employeee with supervisory responsibility from sharing in pooled tips. So long as personal service to patrons is a principle or regular part of the employees' duties, they may share in tips.  Supervisory employees may not share in tips when they have the authority to make employment decisions relating to the baristas.
 
The Second Circuit ruled that, given the limited nature of the supervisory duties performed by shift supervisors, coupled with their principal responsbilities for providing personal servcie to patrons, the shift supervisors' principal responsibilities to provide personal service to patrons, they did not exercise  ‘meaningful or significant authority or control over subordinates.  As a result, the Court ruled that Starbucks does not violate § 196-d by permitting shift supervisors to share in pooled tips.
 
[JT]

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