June 27, 2013 -- Baristas suing Starbucks over its tip-sharing policy say the fight for extra cash is not over after a New York Court of Appeals ruling that is part of a legal battle that has dragged on through numerous courts in multiple states.
"The really important part is that this is not a fight between baristas and shift supervisors," said Shannon Liss-Riordan, attorney for the baristas. "It's a fight between baristas and Starbucks about who has to pay shift supervisors. Why employers want to spread tip pools around is to lower their labor costs so they don't have to pay as much to shift supervisors."
The question is who is going to pay that extra amount in New York state, said Liss-Riordan.
"No one is saying shift supervisors should be paid less, but Starbucks, which is doing well, should be paying them more."
The Court of Appeals ruled yesterday that the case should go back to the federal court of appeals for the Second Circuit using a standard of "meaningful authority", instead of "final authority", to decide the fate of Starbucks shift supervisors and the tips.
Starbucks employs four categories of workers: baristas, shift supervisors, assistant store managers and store managers. After six months' employment, baristas may become eligible for promotion to shift supervisors, the New York Court of Appeal's decision stated.
Two former baristas filed a lawsuit against Starbucks in 2008 alleging the coffee house's policy of including shift supervisors in the tip pools was unlawful under section 196-d of New York's Labor Law. That law prohibits certain types of employers, such as their agents, managers, supervisors and foremen, from getting a cut of the tip jar.
In 2009, the U.S. District Court for the Southern District of New York ruled in favor of Starbucks, saying because shift supervisors' limited supervisory responsibilities "do not carry the broad managerial authority or power to control employees that courts have held to be sufficient to render an employee an 'employer or [employer's] agent' within the meaning of section 196-d".
After the plaintiffs appealed, New York's highest court, the Court of Appeals, became involved to clarify the degree of supervisory or managerial authority exercised by employees to determine whether they are managers or supervisors under the state's law.
"We think shift supervisors have meaningful authority," said Liss-Riordan. "In the words of Starbucks, they run the shifts, tell [baristas] where to go, what to do, and when they can take their breaks. If a barista screws up, the shift supervisor reports to a manager."
Yesterday, the court also affirmed that assistant managers can't share in the tip pool. When the case will go before the federal court has not yet been determined.
Liss-Riordan, an attorney in Boston and New York who focuses on representing low-wage workers in wage and hour litigation, said the "overwhelming majority" of press "have wrongly announced Starbucks won the case."
Jaime Riley, spokeswoman for Starbucks Coffee Company said the company is "pleased with the rulings from The New York Court of Appeals which support our tipping policy as fair and appropriate under New York state law. Our tipping policy ensures the Starbucks partners who directly serve customers- both baristas and shift supervisors- share equally in the tips they receive."
A similar lawsuit went before a Massachusetts court, which ruled differently than New York's district court. In Massachusetts, the court ruled in December that shift supervisors were not eligible to participate in the tipping pool.
Riley said Starbucks disagreed with the court ruling in Massachusetts, saying 90 percent of a shift supervisors' time is customer-facing while the other 10 percent is managerial.
"However, we must respect the court's ruling, and therefore removed shift supervisors in Massachusetts from the tip pool," she said.
Liss-Riordan said that as a result of the Massachusetts court ruling, Starbucks began paying shift supervisors about $3 more per hour.
Riley said the company does not comment on employee compensation, but prior to the ruling in Massachusetts, "Starbucks had been testing a new store operations structure to determine the best way to elevate our partner experience, the operations of our stores, and the experience we provide to our customers."
"Following the court decision in Massachusetts, Starbucks decided to implement this new operations structure in the state of Massachusetts," Riley said. "The updated store operations structure consolidates the assistant store manager and shift supervisor roles into a new shift manager role to increase management presence in every store. This elevated role offers a competitive pay and benefits package and is designed to provide better career opportunities for store partners and accelerate future growth."