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Starbucks Baristas Can Share Tips, Court Says

Starbucks Corp. (SBUX) baristas must share tips with shift supervisors, while assistant managers can be excluded from gratuity pools, New York’s highest court said in answering questions posed by a federal appellate panel.

The world’s biggest coffee chain was sued in 2008 in federal court in Manhattan by two former baristas who accused the company of violating state labor laws by including shift supervisors in tip pools. An assistant managers group sued in the same court, saying they were illegally excluded from the pool.

A federal court in Manhattan supported Starbucks in both suits, ruling that shift supervisors can share in tips because they have limited managerial responsibilities while it wasn’t obligatory to include assistant store managers in gratuity pools.

The plaintiffs in both cases appealed and a U.S. appellate panel in New York asked the state’s highest court in Albany to answer two questions: What factors determine whether an employee is an agent of his employer and ineligible to receive distributions from a tip pool; and does state law permit employers to exclude eligible employees from such pools?

Serving Patrons

The Court of Appeals in Albany today said under state law employees whose main duties are serving patrons can participate in tip pools. That would include shift supervisors, whose primary responsibility is to serve food and beverages, and not assistant managers, who participate hiring or firing workers.

“An employee whose personal service to patrons is a principal or regular part of his or her duties may participate in an employer-mandated tip allocation arrangement” under state law, Judge Victoria A. Graffeo wrote,“even if that employee possesses limited supervisory responsibilities. But an employee granted meaningful authority or control over subordinates can longer be considered similar to waiters and busboys.”

Starbucks didn’t immediately respond to an e-mail sent to its media relations team seeking comment on the decision.

The cases are Barenboim v. Starbucks Corp., 03318-cv-2008 and Winans v. Starbucks, 03734-cv-2008, U.S. District Court, Southern District of New York (Manhattan). The appeals are Barenboim v. Starbucks, 10-4912, and Winans v. Starbucks, 11-3199, U.S. Court of Appeals for the Second Circuit (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court at 8969 or cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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