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Starbucks “Shift Supervisors” Can Share Customer Tips

Starbucks shift managers can participate in store “tip pools,” the Second Circuit Court of Appeals held on Thursday, November 21, 2013. It affirmed that trial court properly ruled in Starbucks favor in a lawsuit over whether the company’s policy of allowing shift managers to share in customer tips violated New York’s Labor Law.

The New York law, which is similar to the federal Fair Labor Standards Act, prohibits employers from sharing in employee gratuities, but allows “the sharing of tips by a waiter with a busboy or similar employee.” The question for the court was whether Starbucks shift managers were more like waiters or busboys (who can share pooled tips) or company managers (who cannot share pooled tips). The line between those two types of employees, the court concluded, “should be drawn at meaningful or significant authority or control over subordinates.”

The Second Circuit concluded that the shift managers did not have such “meaningful or significant authority,” stating:In this case, it is undisputed that Starbucks’s shift supervisors spend a majority of their time performing the same duties as baristas, and are primarily responsible for serving food and beverages to customers. As their title indicates, shift supervisors also have some supervisory responsibilities, such as assigning baristas to particular positions during their shifts, administering break periods, directing the flow of customers, and providing feedback to baristas about their performance. Further, shift supervisors are authorized to open andclose stores, to change the cash register tills, and to deposit money in the bank. But the limited nature of these supervisory duties, considered together with the shift supervisors’“principal” responsibilities to provide “personal service to patrons,” cannot admit a findingof the “meaningful or significant authority or control over subordinates” contemplated by [New York’s Labor Law]. Accordingly, we identify no genuine dispute of material fact as to whether [that law] permits shift supervisors to participate in Starbucks’s tip pools. It does.

The decision constitutes a significant victory for Starbucks. A full copy of the opinion can be found here.

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