Starbucks Tip-Sharing Judgment Reversed

An $86 million judgment against Starbucks was reversed by a San Diego appellate court today. The judgment was based on the finding that Starbucks violated tip-sharing law by allowing shift “supervisors” to share in tip pools. The judgment ended a lengthy class action lawsuit brought by a Starbucks “barista” named Jou Chau.

In a 3-0 ruling, San Diego 4th District Court of Appeals reversed the award, holding that the trial court’s ruling…

…was improperly based on a line of decisions that concerns an employer’s authority to mandate that a tip given to an individual service employee must be shared with other employees….There is no decisional or statutory authority prohibiting an employer from allowing a service employee to keep a portion of the collective tip, in proportion to the amount of hours worked, merely because the employee also has limited supervisory duties. Accordingly, we reverse the judgment and order the trial court to enter judgment in Starbucks’ favor.

Under California law, owners, managers or other “agents” of business owners cannot share in tips given to specific employees. The question in this case dealt with the role of the supervisor, who, it was argued, also performed the duties of a regular barista during shifts. Attorneys for the baristas plan on appealing the ruling to the California Supreme Court.

To read the entire opinion, click here (.pdf).

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