Starbucks Case Tips the Scales: Changing California Law to Allow Supervisory Employees Their Fair Share of the Tips

32 Pages Posted: 20 Jun 2009

Date Written: June 5, 2009

Abstract

In 2008, a San Diego trial court slapped Starbucks Corporation with a $100 million judgment for violation of California's tip sharing laws. Shift supervisors, classified as 'agents' of the employer by statute, could not share in tip jar proceeds, despite spending 95% of their time performing the same duties as ordinary Starbucks baristas. More recently, the Court of Appeal reversed the judgment, reasoning that tips placed in a tip jar are not personally given to or intended for baristas, and so are outside of the statute's reach. While strong evidence suggests Starbucks supervisors should be allowed a share of the tips, the court's result conflicts with the statute's plain language, which excludes certain classes of employees from tip-sharing arrangements. This article argues that the statutory definition of 'agents' should be scrapped and replaced with a more careful distinction between who can and cannot participate in tip pools. The statute's goal was originally to mirror public expectations about who should be allowed to receive tip shares, and the Starbucks case reveals that the per se exclusion of supervisors from tip-pooling is well outside of customers' intended results. Therefore, this article proposes the Fair Labor Standard Act's definition of 'traditionally tipped employee' as a better distinction between employees who should and should not be able to participate in tip sharing or tip pooling.

Suggested Citation

Younkins, Andrew Lee, Starbucks Case Tips the Scales: Changing California Law to Allow Supervisory Employees Their Fair Share of the Tips (June 5, 2009). Available at SSRN: https://ssrn.com/abstract=1415002 or http://dx.doi.org/10.2139/ssrn.1415002

Andrew Lee Younkins (Contact Author)

affiliation not provided to SSRN ( email )

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