Facts

A Starbucks barista filed a class action lawsuit against Starbucks Corporation in October 2004, in which he alleged that Starbucks had a statewide policy and practice of paying the Corporation's shift supervisors tips out of a tip pool with baristas in violation of California Labor Code section 351. The class period runs from Oct. 8, 2000 to March 2008 and includes over 120,000 current and former baristas who have worked for Starbucks in California during that time.

Shift supervisors and baristas are both hourly-paid, part-time employees. Shift supervisors perform all of the same work as baristas, and have additional supervisory responsibilities including supervising and directing the work of baristas. They have no authority to hire, fire, discipline, evaluate or schedule baristas.

Everyone working in the shift supervisor position for Starbucks in California during the class period had to complete a shift supervisor training program in order to be certified as a shift supervisor. Starbucks' employee handbook states that shift supervisors 'direct the work of others' and the job description states that applicants must possess the ability to direct the work of others. At Starbucks stores in California, baristas and shift supervisors (as well as assistant store managers and store managers) serve coffee and food. However, only shift supervisors, store managers, or assistant store managers may lead shifts. Shift supervisors are sometimes, about 25 percent of the time, the most senior employee in a store. The pay scale for shift supervisors is approximately $2 an hour higher (or 25 percent more per hour) than the pay scale for baristas. However, some baristas are paid more than some shift supervisors.

California's tipping statute prohibits an employer or agent of the employer from taking any part of a non-agent's tips, and an agent is broadly defined as anyone having the authority to hire, or fire, or supervise, or direct, or control the acts of other employees.

Result

$86,687,926 in restitution for tips unlawfully received by shift supervisors plus interest. Judge Cowett ruled that Starbucks shift supervisors have the authority to supervise and direct the baristas and thus that they are agents as defined by the Labor Code. As a result, she held that Starbucks could not permit shift supervisors to participate in the pooled tips. In addition, the court announced it will impose an injunction to stop the unlawful tip pooling.

Other Information

Starbucks plans to appeal. Plaintiffs intend to seek attorneys fees and costs.