Starbucks’ headline-making brand recreation is a bit tarnished today by an adverse court ruling. As decided in California, the company owes baristas about a hundred million dollars in tips that were distributed to shift supervisors and managers. The coverage makes it look like corporate was stealing from their workers. The L. A. Times, for example, leads by saying that “Starbucks got caught with its hand in the tip jar.”
The practice might have been illegal under California law, but it wasn’t stealing. If baristas (oops, I mean “partners”) didn’t like the practice they were free to work elsewhere or renegotiate terms. It’s also a sensible way to do business: if supervisors spend most of their time doing the work of baristas and cashiers, there’s no reason for them not to get tipped out with the other workers. Restaurants with on-the-floor managers who serve tables do exactly the same thing.
Assuming Starbucks’ compensation model is effective, this ruling won’t change much. It’s a one-time bonus for baristas who get to take advantage of a stupid law and a one-time hit for the corporation that’s getting nailed by it. It could lead to raises for supervisors to compensate for lost tips and will likely slow down pay increases for non-management positions. It doesn’t do much of anything to change incentives, except perhaps to make managers less invested in running fast, friendly stores. This isn’t a victory for workers’ rights; it’s a forced replacement of a business model that was working well to another, possibly less efficient one demanded by court decree.