By Chris | March 31, 2008
A little over a week ago, a superior court ruled that Starbucks was violating California law by compensating shift supervisors out of the tip pool. The judge ordered Starbucks to pay baristas over 100 million dollars in illegally distributed tips. Under California law, employers are not allowed to pay managers out of tips.
California Labor Code Section 351 states:
No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an employee on account of a gratuity, or require an employee to credit the amount, or any part thereof, of a gratuity against and as a part of the wages due the employee from the employer. Every gratuity is hereby declared to be the sole property of the employee or employees to whom it was paid, given, or left for.
Since then, class action law suits have been filed in Washington, Minnesota, and other states. Starbucks is appealing.
The decision reminded me of a summer I spent working at Paradise Inn in Mt. Rainier National Park. The assistant general manager would always stand outside to carry luggage and get tips. It made the bellhops furious. The manager was depriving them of their main source of compensation. I was sympathetic with the bellhops.
However, I don’t think Starbucks is wrong in this case. “Shift supervisors” are making drinks and serving pastries along with regular baristas. Customers tip with the intention of compensating those who serve them. It seems reasonable that the tips should be split between people doing the same work. Tips act as an incentive for workers to provide high quality service. Preventing shift supervisors from sharing in tips removes a positive incentive for them to provide good service.
The judges ruling changes the rules after the game has started. Starbucks has a reputation for treating its employees well. Regular baristas were aware of the tip sharing agreement upfront. If this judgement stands, I suspect lots of shift supervisors will be stepping down.
Note: The judgement was calculated using an average tip payment of $1.71 an hour for shift supervisors. That makes me feel much better about the small tips that I occasionally leave for baristas.