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Calif. court overturns tip pool ruling against Starbucks

SAN DIEGO A California appeals court in San Diego ruled Tuesday that Starbucks Corp. could legally allow barista shift supervisors to share in collective tip jars.

The ruling by the 4th District Court of Appeal reversed a San Diego Superior Court decision last year that awarded $86 million in restitution, plus about $20 million in interest, to baristas who filed a class-action lawsuit in 2004 arguing that Starbucks had violated state labor laws by letting shift supervisors share in customer tips left for baristas.

In California, state labor code prohibits an employer or agent — defined as anyone in a supervisory role — to share in tips. The baristas had contended in their lawsuit that shift supervisors fall into that category.

In Tuesday’s ruling, however, the court found that Starbucks shift supervisors “essentially perform the same job as baristas” and therefore should be allowed to share in tips.

“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,” the court said in the ruling.

In a statement, Starbucks officials said the ruling validated the company’s longstanding tip policy, “which ensures that both baristas and shift leads — the hourly [employees] in every Starbucks store — receive a fair share of the tips that customers leave for the legendary service they provide.”

David Lowe, an attorney representing former barista Jou Chau, who filed the original complaint on behalf of more than 100,000 current and former baristas, said the Court of Appeal's decision was "riddled with factual inaccuracies and clear legal errors."

For example, Lowe said the ruling argued that it was undisputed that customers intended their tips to go both to baristas and shift supervisors, when Starbucks had admitted they had no way of gauging customer intentions.

Lowe said he may file a petition for re-hearing before the Court of Appeal within the next couple weeks, and, if necessary, appeal the decision to the state Supreme Court.

Attorney Brian Van Vleck of the Los Angeles law firm Van Vleck Turner & Zaller, which was not involved in the Starbucks suit but has defended other restaurants against tip-pooling claims, warned in a blog posting that employers should not jump to the conclusion that managers can share in employee tips.

The Court of Appeal’s ruling applies only where there is a collective tip box in circumstances where customers understand that tips would be shared and that the managerial employee is part of the “team” that provided service, he wrote.

Under Starbucks' policy, baristas or shift supervisors who receive an individual tip from a customer directly are entitled to keep that gratuity. They are not required to add it to the collective tip box.

Contact Lisa Jennings at [email protected].

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