Judge draws clear line at tip jar in Starbucks case; small California businesses likely to be affected too07:15 PM PDT on Wednesday, April 2, 2008
By LOU HIRSH
The Press-Enterprise
Dipping into its
employees' tip jars could get Starbucks into hot water in other places
besides California, local legal experts said, and similar businesses
will need to take heed of issues raised in the high-profile civil suit
against the coffee giant.
Cynthia Germano, a labor lawyer
with Best Best & Krieger in Riverside, said the Starbucks dispute
puts a spotlight on California laws that have been on the books for
several years.
These laws state that only front-line workers and not managers are to share in tips.
At some workplaces, however, management and employee functions are blurred.
"The places that will need to watch out are the mom-and-pop shops where
people wear more than one hat," Germano said.
Last week,
San Diego County Superior Court Judge Patricia Cowett ordered
Seattle-based Starbucks to pay its California baristas more than $100
million in back tips and interest, saying state law prohibits managers
and supervisors from sharing in tip jars and other types of tip
pooling.
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regular customer, feed the Riverside coffeehouse's tip jar.
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A hearing is set for May 1 in Cowett's courtroom on how the tip money should be distributed.
Starbucks has said it will appeal the ruling, responding in a statement
that "shift supervisors are not managers and have no managerial
authority."
In the past week, similar lawsuits have been
filed against Starbucks in Massachusetts and Minnesota, and others
could be on the way in Washington and New York.
Germano
said the California decision will likely prompt Starbucks to make
changes sooner rather than later because the state appeals process
could take years to conclude.
"They're probably not going
to keep doing what they're doing," she said. "They won't want (more
exposure) in case the appeals court doesn't agree with them."
David Balter, a lawyer with the state Department of Industrial
Relations' Division of Labor Standards Enforcement, said California
laws regarding the sharing of tips have been on the books since 2000.
The suit against Starbucks was filed in 2004 and granted class-action status in 2006.
"The law is pretty clear that management is to keep its hands out of
the tip jar," Balter said, adding that he could not comment
specifically on the Starbucks case.
Legal experts said
the key issue in Starbucks' appeal is whether its shift supervisors are
agents of management.
California generally considers them
as such if they are giving any orders to workers, scheduling their
hours or taking other actions affecting their employment.
Starbucks contends the supervisors are hourly employees who do much of the same tasks as regular workers
Lawyer Michael Perkins of the firm Fine, Boggs & Perkins said his
office in Half Moon Bay has received a half-dozen calls from clients in
the past week, asking whether they should be concerned about the
Starbucks case.
Perkins, whose firm advises several
California industries, including restaurants, said the case could
prompt similar suits at other companies, by building awareness of
existing laws.
"Employees today are much more savvy about
these things than they were 10 years ago, especially with the
Internet," he said.
Jeffrey Thurrell, a lawyer with
Fisher & Phillips in Irvine, said the Starbucks circumstances are
very specific, and he does not foresee the case creating widescale
changes at other businesses.
"Most full-service
restaurants know how to comply and steer clear of this kind of issue,"
Thurrell said. "What's going to be a potential problem spot are these
self-service places, like (coffeehouses) and ice cream shops, where
people give tip money to people at a counter."
At Back to
the Grind, a coffeehouse in Riverside, owner Darren Conkerite said the
Starbucks matter likely won't have a large impact on smaller businesses
like his.
"We don't have shift managers," Conkerite said.
"I'm the owner, and the shift employees I have on duty at a given time
will share all the tips for themselves, even if I'm also working. But
they know they're going to have to work for it -- it's not going to be
a walk in the park."
The Associated Press contributed to this report.
Reach Lou Hirsh at 951-368-9559 or lhirsh@PE.com
Some provisions of the tipping laws the state enacted in 2000:
Workers only:
Employers or their agents (managers and supervisors) are barred from
taking or receiving tip money left for employees.
In the chain:
Tip pool participants are limited to employees who contribute in the
chain of service bargained for by the patron.
No cash register: Business operators cannot use employee tip jars to make change or to conduct other transactions.
Not wages: Tip money does not count against an employer's minimum-wage obligations to workers.
Punishment: Employer violations are misdemeanors, punishable by a fine not to exceed $1,000 per infraction.
Source: California Department of Industrial Relations