Starbucks vindicated

Last year Starbucks took a lot of heat in the press for an $86 million ruling against them for taking tips from baristas and giving them to management. In reality the “managers” in question were shift supervisors doing essentially the same job as baristas and customers leaving tips reasonably expected them to get their share. I defended Starbucks at the time and I’m glad to see that a California appeals court has reached the same conclusion [full decision in .DOC format here):

Specifically, the undisputed facts show: (1) the vast majority of the time shift supervisors and baristas perform the same jobs; (2) these employees rotate jobs and work as a "team" throughout the day; (3) customers intend that their tips placed in the collective tip boxes collectively reward all of these service employees; and (4) Starbucks's manner of dividing the collective tip boxes among the service employees (based on the time worked by each employee) is fair and equitable. [...]

Because the trial court’s interpretation of section 351 was not supported by the statutory language and led to a result contrary to the fundamental purpose of the statutory scheme, it is one that the Legislature could not have intended. We reverse the judgment in its entirety.

Cue allegation from amazingly persistent commenter Gary that the appeals court must have been bribed by Starbucks in 3… 2…

[Via Starbucks Gossip.]

Comments

  1. Ben says:

    Beating Gary to the punch (as first commenter, not first spurious allegation-thrower):

    The issue is, and always has been, the proper interpretation of a relatively vague California wage law. As the different decisions by the appeals court and the trial court show, it’s meaning was very much open to interpretation. And, in that case, courts do what they always do….they look at the language, the history of the legislation, the legislature’s stated policy goals….and they try to be as faithful as they can to what they think the intent of the statute was.

    As I said before, if the workers had a legal right to those tips (statutory right, contract right….whatever), then what Starbucks did is stealing. Even if Jacob thinks that’s a stupid conclusion. If they workers did not have a legal right to the tips (and the appeals court presents a cogent case for why they did not), then what Starbucks did is simply another business practice that they have the right to exercise. Even if Gary thinks that’s highway robbery.

    I know I’m doing a lot of stating the obvious. It’s just that, in this situation, I don’t think the outrage (or whatever you call it) previously expressed by Jacob or Gary is appropriate.

  2. Jacob Grier says:

    @Ben: I basically agree with you, but would add two points:

    1) If the statute is vague and open to different interpretation by reasonable people, Starbucks was treated very unfairly in the press at the time of the initial ruling, and so for that reason the case is worth revisiting publicly.

    2) Tip pooling isn’t the only workers’ rights issue here. The other is freedom of contract. Starbucks’ shift supervisor system is good for the company and arguably good for workers as well, since without it they may not have as many opportunities for promotion. They enter into the tip pooling agreement when they take the job knowing that they too could be promoted to a shift supervisor. If the statute were interpreted in a way that eliminated that system, I’d probably consider that a violation of employees’ freedom of contract.

  3. Ben says:

    Jacob: Your second point is really stretching. Any law or regulation could have an incidental impact on the way people do business and the contracts they enter into. To say that a law which changes the arrangement between employer and employee – as do anti-discrimination laws, minimum wage laws, workplace safety laws – violates freedom of contract just because of that change is borderline absurd.

  4. Jacob Grier says:

    @Ben: I’m aware of the implications and agree that taking freedom of contract seriously would require some major changes to existing laws. I think it’s an avenue worth exploring.

  5. George says:

    What’s so vague and open for interpretation about “No employer shall take any part of the gratuities paid, given or left for an employee by a patron”?

    The word “take” is one of the most explicitely defined words in common law.

    When an employer requires tip pooling he is taking the tips. End of story.

    Outside of employer required tip pooling, show me a case where stealing someone’s property is open for interpretation?

    What the law states is that no employer shall interfere with an employee’s ability to have, hold and enjoy what a patron has bestowed upon him as a tip.

    When employers mandate tip pooling, the employer is requiring the employee to give up what has been given him so that the employer may use the money for the employer’s tip pool. If that’s not taking then there are thousands of people currently in jail that shouldn’t be there. The employer is using the employee’s tip as if it’s the employer’s property. Such use of another’s property is considered stealing 99% of the time. Why is it open for interpretaion in the case of workers?

  6. Gary says:

    Specifically, the undisputed facts show: (1) the vast majority of the time shift supervisors and baristas perform the same jobs;

    And what’s the point? Is there any law that states it’s ok to take an employees tips as long as you give them to someone who is performing the same job?

    (2) these employees rotate jobs and work as a “team” throughout the day;

    Again, what is your point? Most workers are required to work as a team. Is there a law that states that the customer’s tip belong to all those working as a team? How can a law define who the customer’s private property belongs to?

    (3) customers intend that their tips placed in the collective tip boxes collectively reward all of these service employees; and

    Stop right there….
    This is nothing but a blatant lie.
    What proof is there that every customer who places a tip in Starbucks tip box is intending to reward all the service employees? This is not an undisputed fact, this is an incorrect and absurd assumption. Starbucks is intentionally preventing customers from distinguishing who their tip is intended for by putting out a jar with no ones name on it which, subsequently, deprives customers of their ability to designate who their tip is intended for. How can it be said that customers are intending to tip all those who provide service when customers are obviously being deprived their choice in the matter?

    (4) Starbucks’s manner of dividing the collective tip boxes among the service employees (based on the time worked by each employee) is fair and equitable. [...]

    How is it fair and equitable for Starbucks to collect and divide the customer’s tip when state laws specifically state that NO employer shall take, collect or receive any part the tips paid, given or left an employee by a patron?

    How can Starbucks fairly and equitably appropriate what state laws prohibit them from collecting or taking. In order for Starbucks to divide tips among service employees, Starbucks must violate state law by collecting and taking control of the tips customers have paid, given or left an employee.

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