Who gets the tips at Starbucks?

If you buy coffee at Starbucks, there is a tip box on the counter. Management distributes the tips with its employees. Assistant Store Managers don't get those tips, though, only lower-level employees. Shift Supervisors do get tips, to the dismay of Baristas, the line-workers who have to share the tips with them. The question is whether ASM's and Shift Supervisors are eligible for tips under the New York Labor Law.

The case is Barenboim v. Starbucks Corp., decided on October 23. Actually, the case wasn't decided. The Second Circuit sends the case to the New York State Court of Appeals because it involves an open issue of state law. Under the Labor Law sec. 196-d "agents" may not "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." Are Shift Supervisors "agents"? What about ASM's? The New York Court of Appeals will have to worry about this, as the Second Circuit certifies the case for review by the state's highest court.

There are two cases here. The first is a putative class action filed by "baristas" who are the line workers that take customers' orders and serve the coffee and tea. They are aggrieved because they have to share the tips with Shift Supervisors, whom the baristas say are agents and therefore ineligible for tips. The second case is a putative class action of Assistant Store Managers who were denied the tips because Starbucks says they are "agents" under the Labor Law.

The Second Circuit is skeptical of the argument that shift supervisors are not entitled to tips, as they perform direct customer service, the kind of service that customers acknowledge when they throw money into the tip jar. But the Court of Appeals (Raggi, Winter and Livingston) is hesitant to reject this argument entirely. This issue is now in the hands of the New York Court of Appeals, which takes on cases like this from federal court when they raise an issue that is unique to state law and may implicate state public policy.

As for the case brought by the ASM's, these employees primarily serve customers and wear the same uniforms as their subordinates. They also have managerial tasks, but lack final authority over store decisions. They help the store manager with job interviews, employee discipline and preparing work schedules. In Starbucks's internal job descriptions, ASM's are listed as retail store support, and only store managers are considered management. This is a colorable argument, but it raises a matter that is unique to state law. "the same interpretative difficulty is present in [both] appeals: What factors should a court consider in determining whether an employee is his employer’s agent and, thus, ineligible to receive distributions from an employer-mandated tip pool? Because the meaning of the word 'agent' in § 196-d is not settled in New York case law, we defer decision and certify this question to the New York Court of Appeals."