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Coffee City

Melissa Allison follows the world's biggest coffee-shop chain and other Seattle caffeine purveyors.

June 2, 2009 at 1:59 PM

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Court overturns $86 million tips decision against Starbucks

Posted by Melissa Allison

A California appeals court has overturned last year's $86 million decision against Starbucks, saying the company did not violate state law by allowing shift supervisors to share tips with baristas.

Starbucks policy requires baristas to share money in tip jars with shift supervisors, who mentor and coach them.

Last year's ruling by San Diego County Superior Court Judge Patricia Yim Cowett ordered the company to discontinue its tip-pooling policy and pay damages to more than 100,000 Starbucks baristas.

A three-judge panel with the California Court of Appeal said in a ruling filed today that the law does not prohibit an employer from dividing tips placed in a "collection box" among employees who provided service.

The ruling "validates our longstanding tip policy, which ensures that both baristas and shift leads - the hourly [employees] in every Starbucks store - receive a fair share of the tips," Starbucks said in a written statement.

David Lowe, an attorney who represents plaintiffs, said they consider the ruling to be a "temporary setback" and now will look to the Supreme Court of California. "The Court of Appeal clearly erred, and misinterpreted the law in reversing the trial court's decision," he said.

The original lawsuit was filed in October 2004 by a San Diego barista who no longer works for Starbucks. The suit gained class-action status in 2006.

In that case, plaintiffs argued that shift supervisors are "agents" of the company under California law because they "supervise and direct" baristas' work, and therefore can't share in the same tip pool.

Starbucks disagreed, saying shift supervisors have no managerial authority. Store managers, who do not share tips, set employees' work hours and make other personnel decisions.

Here's the appeal court's full ruling.

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