New York Court Rules Against Starbucks’ Employees in A Suit about Tips

If you are working at Starbucks and think your “shift supervisors” shouldn’t be sharing in your tips, then it may be time to move out of New York State and into Massachusetts.

The 2nd Circuit Court, whose jurisdiction extends to New York, Vermont and Connecticut, ruled against baristas in a class action claiming that their shift supervisors should not be allowed to grab a cut of their bounty under state labor law. In 2008, baristas Jeana Barenboim and Jose Ortiz sued Starbucks for more than $5 million on behalf of more than 5,000 of their fellow employees serving at 400 New York stores. They claimed that the chain’s corporate structure made them share their hard-earned tips with their “shift supervisors,” whom they alleged to be actually their bosses. This put the company in violation of New York Labor Law, according to the lawsuit.

Starbucks, on the other hand, argues that shift supervisors spend the bulk of their time performing the same duties as baristas (serving food and drinks to customers), resulting in them not falling under the category of “employer” or “employer’s agent.”

But the shift supervisors hold many other responsibilities that the court had to take into consideration when making its holding. The shift supervisors assign baristas to certain positions during shifts, administer break periods, direct the flow of customers, and give feedback to baristas. In addition, shift supervisors have the authority to open and close stores, change the cash-register tills and deposit money in the bank. Even though they cannot hire or fire staff, shift supervisors can discipline baristas, report their job performances to managers, and coordinate their breaks and schedules.

Even with all the responsibilities held by the shift supervisors, late this November, the 2nd Circuit Court found that these duties were not enough to qualify shift supervisors as employers under state law.

However, almost exactly one year ago, the Boston-based 1st Circuit Court reached precisely the opposite conclusion when it upheld a $14 million judgment against Starbucks in a class action of 2,500 baristas suing under the Massachusetts Tip Act. Unlike New York Labor Law, the Massachusetts Tip Act mandates that only employees with “no managerial responsibility” can qualify as “wait staff.”

By contrast, New York State Labor Law states, “No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.” The statute does not define the level of managerial responsibility that makes someone an employer.

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