Wednesday, June 3, 2009

California Court of Appeals Gives Starbucks Big Win

Starbucks We posted a while back on a California district court's $100 million-plus award against Starbucks to baristas who alleged that the company's requirement that tips for baristas be shared with shift supervisors violated California state law that prohibits managers and supervisors from sharing in employee gratuities.  The California Court of Appeals, however, has just reversed that award.  The difference, according to the appellate court, was that the trial court based its decision on cases finding violations where tips given to individual employees were required to be pooled and ultimately distributed to managers among others.  In this case, however, the tips were initially given in a "tip jar"--not to an individual employee.  According to the court, Distributing initially pooled tips to managers did not violate the California law:

The Legislature wanted to prohibit a business owner from deceiving a customer who left a tip for an employee by requiring that the employee later transfer any part of the tip to the employer or the employer's agent. It is undisputed here that the tipping public intended to collectively tip both the baristas and the shift supervisors—for their work as a "team." Requiring these collective tips to be given solely to baristas would mislead the public.

It's not clear to me that the public thinks that supervisors will receive some of the tips left in a tip jar (that's certainly not my intent when I leave such tips), but the legislature is going to have to make the statute more explicit if they want to prevent tip sharing with supervisors in all instances.


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One of my seminar students wrote a very good paper on this topic. He just listed it at SSRN, here:

It's definitely worth checking out.
Maria Ontiveros
University of San Francisco School of Law

Posted by: Maria Ontiveros | Jun 5, 2009 12:59:30 PM

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