California Court Orders Starbucks to pay over $105 Million for Impermissible Sharing of Tips!
A California court has awarded more than $105 million dollars in restitution to Starbuck employees as a result of the company’s practice of permitting supervisors to share in customer tips! This case is important to all California employers that have similar practices between their supervisors and employees. Tips are for the non-exempt employees! Please evaluate your policies to ensure your organization is not engaging in any similar practices.
I was told during an HR class that Starbucks was appealing the decision because they had a written policy in place and that the supervisors worked and had physically prepared the majority of the beverages being served. Would that make a difference? Would “job title” be the decidng factor if there was a written policy already established addressing the concern?
Well. it might make a difference, however, if they prepared many of the beverages, then the issue will arise as to whether or not they are considered an “exempt” employee. To be exempt their supervisory duties must be in excess of 51% of their responsibilities. If they spent a large majority of the time preparing beverages to be able to earn the tips, then the managers or assistant managers can argue that they were not exempt and should be paid any overtime that they may have worked. This could cause another class action lawsuit. I hope their appeal is based upon some stronger position. I can’t see this one prevailing. They probably already argued this point at the trial level and it obviously failed.