Second Circuit Cements Starbucks Tip-Sharing Victory

, The Litigation Daily

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Starbucks has prevailed in a dispute over whether shift supervisors in its coffee shops in New York state can share in tip pools. The U.S. Court of Appeals for the Second Circuit ruled Thursday that the practice of Starbucks supervisors splitting pooled tips with other workers doesn't violate New York labor law. The summary ruling, which doesn't have precedential effect, upholds a decision by Manhattan U.S. District Judge Laura Taylor Swain.

New York law bars employers or their agents from sharing in workers' tips. The Starbucks workers, who had sought to bring a class action, argued that the law prevents any employee with "even the slightest degree of supervisory responsibility" from sharing tips. The Second Circuit asked the New York Court of Appeals to interpret the scope of the law, and last June the state's high court held that supervisors are barred from splitting tips only if they have meaningful or significant managerial authority.

Applying this test, the Second Circuit found in Thursday's ruling that Starbucks shift supervisors don't have significant authority over subordinates. Instead they spend a majority of their time doing the same work as baristas, and are mainly responsible for serving customers. And while they have some supervisory duties, such as giving baristas feedback about their performance, those duties aren't significant, the court ruled. They can't, for example, formally discipline workers.

Starbucks was represented by a team from Akin Gump Strauss Hauer & Feld including Daniel Nash and Rex Heinke. We contacted the firm but did not hear back.

The plaintiffs were represented by Boston's Lichten & Liss-Riordan. Partner Shannon Liss-Riordan told the Litigation Daily she was disappointed in the ruling. Liss-Riordan also represented Starbucks workers in Massachusetts who won a ruling last year that prevents shift supervisors from getting a cut of their tips. (Massachusetts law stated that wait staff employees could only share tips with fellow staffers who had "no managerial responsibility.") Liss-Riordan said that after the U.S. Court of Appeals for the First Circuit held that the tip-sharing practice violated Massachusetts labor law, the Massachusetts Starbucks shift supervisors got a $3 an hour raise to compensate them for their lost tips.

Laurel Harper, a spokesperson for Starbucks, said the company is pleased with the Second Circuit's ruling. She also added that the company did not increase the pay of Massachusetts shift supervisors because it eliminated that position after the First Circuit ruling and created a new position with more responsibility for those workers. She declined to discuss the pay for that position.

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