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.
If the baristas had the legal right to it, and they did not get it, then yes it is by definition stealing.
You might argue that this “right” to the tips is simply a legal construct. So, I would argue, are all property rights.
If you argue that managers who do a lot of barista work have some moral right to the tip jar because they do that work….well, that’s a decent argument. One might argue that it’s simply one among many. Another argument might be that managers and supervisors get paid more so that they don’t have to depend on tips as part of their income.
I don’t have a strong investment in this issue and you may be right about the efficiencies. I guess I just don’t get your moral outrage at this ruling. What - in your book - would qualify as “a victory for workers’ rights”? Or is anything where the law forces a change in the business model that the market would not demand by definition a bad thing?
Comment by Ben — March 21, 2008 @ 2:16 pm
Ben, I’m not outraged, I just think the way the ruling is portrayed in the media is dumb. Workers knew what they were contracting for and agreed to the pay system; in the long-run, wages will adjust to the mandated tip system and employees aren’t really going to be any better off. Starbucks’ system worked, encouraging management to get its’ hands dirty and work on all aspects of the store. One guy was able to change it and score big money because of a law that was made to apply to businesses without such blurry lines between management and regular employees.
If Starbucks was redistributing tip money in secret, or not giving workers’ their full share, or violating their contracts in some other way, then stopping those abuses would be victories for workers’ rights. This, however, is just a feel good court case that doesn’t really accomplish anything.
Comment by Jacob Grier — March 21, 2008 @ 2:32 pm
Actually, in many states it’s illegal for managers to take tips, even if they do wait tables. I know there are some places where managers are part time and wait tables in the same restaurant part time and keep the tips. However in all the restaurants I’ve worked, if a manager got behind the bar or picked up a table, they either refused tips or passed them on to other servers/bartenders. In my experience, though, the managers were all salaried.
Comment by lsmsrbls — March 21, 2008 @ 7:44 pm
Again, I’m not saying anything about whether Starbucks had a good business model. But I don’t see the difference between the situations you classify as genuine abuse of workers and this case.
“Not giving workers their full share.” How do you define “full share”? Clearly you define it in a way differently than the California courts. On what basis?
“Violating their contracts in some other way.” So a violation of their contract rights is abuse but a violation of their statutory rights isn’t?
You’re saying one guy scored big money. Was it a class action or a single plaintiff lawsuit?
Ultimately, if the flaw’s in the law, I’ve no doubt that Starbucks has the clout to lobby to change it.
Comment by Ben — March 22, 2008 @ 1:27 am
I’d argue this from a different angle: this was fraud against the consumer.
Customers left the tip money not for managers, but specifically for the employees who waited on them. Nobody out there wants to tip managers and if it becomes well known that a large portion of the money going into the tip jar is making its way up the chain of command, people are going to stop leaving money. For the corporation to take money left for the bottom rung employees and redistribute it to the managers is deceitful and in direct contradiction to the wishes and expectations of the customers. The court re-directing the money to its proper recipients is right from the customer’s vantage point.
Now, if they want to do this, they’re free to put a sign over the tip jar explaining where that money is going and that it’s not in fact going to the people giving you coffee. I suspect tipping would drop appreciably. Come to think of it, that would actually be a great idea in general. I’d like to know if my money is going to waiter, or to a bus boy, or to a chef, or to a maitre d’… the proportions involved could impact my tipping somewhat dramatically.
Comment by RumorsDaily — March 22, 2008 @ 9:51 am
lsmsrbls, speaking from experience, that’s not always the case.
Ben, by “full share” I mean giving them their agreed upon portion of all the tips that were donated. As for statutory rights, I have no opinion on whether or not the court properly applied California’s law. What I’m saying is that the statutory rights, if they are being applied correctly, are interfering with contracts that were freely entered into in a business model that the law was not designed for. Thus, it’s a stupid, outdated law.
RD, that’s a fair point. But it could be easily turned around. At Starbucks, the average customer probably can’t tell the difference between a barista and a shift supervisor, because they’re doing basically the same thing a lot of the time. So you might be thinking you’re tipping the person helping, but actually not. It’s a fluid boundary that seems to make a lot of sense, but the law doesn’t really recognize it.
Comment by Jacob Grier — March 22, 2008 @ 4:41 pm
My coffee shop experience is limited (I drink neither coffee, nor tea, so I don’t really have much reason to spend time there). If that’s the case, then obviously my comments wouldn’t apply.
I was really thinking of restaurants where a manager, at least as far as I know, wouldn’t have a direct hand in getting me my food and hence would be taking money from me that was intended to go to my server.
I wish I liked coffee.
Comment by RumorsDaily — March 22, 2008 @ 8:36 pm
California Labor law 351 states that, 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.
Starbucks, like many other businesses, is implementing an illegal policy that requires that all tips must be collected and shared.
If Starbucks had not been allowed to require that all tips be collected and shared, there would not have been an issue when some mandagers received tips. The issue is not that managers are receiving tips, the issue is, Starbucks is illegally collecting tips and controlling them.
Employers have errantly been allowed to require tip pooling even though California’s labor laws specifically prohibit employers from collecting tips. The only reason so many restaurants are being allowed to require that tips be pooled or collected is because business owners have been successful at corrupting our judicial system.
While California’s laws clearly state that employers are prohibited from collecting tips, California’a judges say there’s nothing illegal about it. California’a judges say California Labor Code Section 351 allows involuntary tip pooling and thus employers may collect tips.
The thing is, there can be no involuntary collecting of tips without it being quite evident that the employer who is initiating such pooling is collecting tips and in so doing is violating state law.
It is my opinion that several California judges have simply been paid off to lie about California’s Labor laws.
The law says that employer can’t collect any tips and judges say their not collecting tips when they force workers to placr their tips into a plastic box with the word “TIP” written on it.
The law says that employers can’t take their employee’s tips and yet judges say their not taking the tips when they collect them and give them to their managers.
The law says that neither an employer nor his agent may receive tips and yet only one judges finally stands up and says enough is enough.
Comment by Gary — May 14, 2008 @ 2:38 pm
Gary - The law doesn’t always work that way. While the words of the statute may list “collect” as one of the barred employer practices, it’s not inherently clear what that means, and that ambiguity leaves room for different interpretation which can explain the judicial tendencies more easily than corruption does.
The list of barred activities is that no employer shall “collect, take or receive” which sounds to me, considering all three words, like they’re targeting employers who gather AND keep a share of the tips for themselves. At least, that’s what ‘take’ and ‘receive’ are hinting at, and that’s certainly a viable interpretation of “collect” (see also the concept of ‘collect[ing]’ taxes).
The problem with laws is that while they may seem perfectly clear at first blush, many people may read them slightly differently, and those slight variations can have a dramatic outcome on the meaning and enforcement of the law. Judges are tasked with the duty of interpreting what those words means, and they do so with a variety of tools including the thoughts of previous judges on the same law, statutory construction, legislative history, dictionaries (both legal and non-legal) and outside experts.
It’s unlikely, as you surmise, that all the judges have been “bought off” or “corrupted.” What’s more likely is that the judges merely came to a different conclusion then you did as to the meaning of this word and are interpreting the law as attempting to ban employers from taxing the employee’s tips, which seems like a more sensible goal political than one which merely bans employers from temporarily collecting employees tips.
For what it’s worth, that’s probably the way I’d read it too.
Comment by RumorsDaily — May 15, 2008 @ 9:16 am
So what you are saying is that when California laws state that No employer shall collect, take or receive any gratuity, employers are allowed to collect and control the gratuities as long as they don’t directly put them in their pocket?
It sounds like an excuse a little kid would come up with after he’s stolen another kids lunch box. “I didn’t take Johny’s lunch, I just shared it with my friends. They ate it, not me.”
So what you are saying is that when state laws instruct that employers cannot collect, take of receive any gratuities, such laws really don’t prohibit employers from collecting and taking the tips unless they put the money directly into their pocket. It’s ok if they use the money to buy a new car or use the money to pay their employees who didn’t receive tips.
I will not believe that a judge of ordinary intelligence would mistakenly interpret the word “take” simply to mean directly put in one’s own pocket.
Employers are forcing their workers to pool their tips into one fund where the employer will control who recevies a share of the money, and how much each will receive.
Can you imagine if I did that to one of Californis’s judges. Imagine me forcing a judge to give over the money in his billfold to me so I can determine who will receive the money. While I could argue until I was blue in the face that I did not keep any of his money, he is not going to let me off the hook simply because I didn’t keep any of it. It wouldn’t matter if I explained that I gave his money to my barber. It wouldn’t matter if I explained that I gave his money to charity. The agrument that I did not keep his money would not exhonerate me.
I think it is more than apparent that judgess in California are being bribed by restaurant owners. While state laws clearly state that No employer shall collect, take or receive any gratuites paid given or left for an employee, seversal judges have ruled that forcing workers to turn their gratuities over to the employer so he can share them with workers of his choosing is not the collecting or taking of gratuities California’s laws were enacted to prohibit.
Show me one definition of the word “take” that explains the one must keep what has been taken in order to take. If I collect the money in your dresser drawer and use it to pay my gardener, have I not taken your money?
If I collect the sprinkler heads in your yard and give them to your neighbor have I not taken your sprinkler heads?
How can you interpret the rulings of these judges as anything other than corruption.
Give me some logical reason to believe that judges in California are not simply lying to rule in favor of business owners.
Comment by Gary — June 17, 2008 @ 3:16 pm
Starbucks was stealing tips just like the restaurants who require tip pooling are stealing tips. They intimidated their employees into putting their tips into a box where management will control the money. The empoyees who were given tips were threatenedd with termination if they didn’t put their tips into the plastic tip box. After all tips were placed into the little plastic box, the employee who had put his tips into the box had no say over what would become of his tip.
Don’t tell me that’s not stealing.
Comment by Gary — June 17, 2008 @ 3:53 pm
Give me a logical reason as to why judges in California are lying in favor business owners? You say they’re being bribed? Do you have ANY evidence to back that up? Do you think ALL of the judges are being bribed? Doesn’t that seem kind of ludicrous?
The 9th Circuit, the federal judicial circuit that covers California, is the most liberal circuit in the country and presumably most supportive of employees’ rights. This case was in state, not federal court, but I have a hard time believing the state court judges are going to be much different politically.
As I said above, one of a judge’s tasks is interpreting the meanings of words which, although they may appear clear to you, are not un-ambiguous. Judges, according to you, repeatedly and unanimously have decided that you are wrong about your interpretation of these words. I haven’t read the actual decisions, but I can assume that they give some discussion to this point. Maybe I should try to look it up…
Comment by RumorsDaily — June 18, 2008 @ 9:00 pm
Nope, can’t find it through Lexis. Oh well.
Comment by RumorsDaily — June 18, 2008 @ 9:08 pm
The customers are giving tips because they believe it is going to the people who prepared their drink. If the company wants to give their managers a bonus, they should get the money from their bank account. Not the employee tip jar
Comment by jmiller — July 3, 2008 @ 1:36 pm