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Starbucks must pay $14M for unlawful tips policy

By: Pat Murphy, BridgeTower Media Newswires//November 15, 2012//

Starbucks must pay $14M for unlawful tips policy

By: Pat Murphy, BridgeTower Media Newswires//November 15, 2012//

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Starbucks violated state wage and hour law by allowing shift supervisors to share in its baristas’ tip pools, the 1st Circuit has ruled in affirming a $14 million class award.

Starbucks staffs its stores with four categories of employees: store managers, assistant managers, shift supervisors and baristas. The job of baristas is to serve food and beverages to customers. Shift supervisors also serve food and beverages, but have other duties as well.

Starbucks’ stores maintain tips containers next to its cash registers. Pursuant to company policy, accumulated tips are distributed weekly to baristas and shift supervisors in proportion to the number of hours they worked.

A class of former Massachusetts baristas sued, alleging Starbucks’ tip pooling policy violated state law. Under the Massachusetts Tips Act, “wait staff” employees shall not be required to share tips with anyone who is not a wait staff employee.

The 1st Circuit found that Starbucks shift supervisors had some managerial responsibility and, therefore, under the Tips Act could not deem wait staff entitled to share in tips.

“Here, the issue is not whether the monies collected in the tips containers are tips; it defies reason to think of them as anything else. Rather, the issue is which employees may receive distributions from the communal tips pools. It is this issue that the Tips Act resolves. In doing so, the Act prohibits a system in which wait staff and employees who have managerial responsibilities share in the same reservoir of tips,” the court said.

U.S. Court of Appeals, 1st Circuit. Matamoros v. Starbucks Corp., No. 12-1189. Nov. 9, 2012.

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