Starbucks: Tips Come in Handy When You Don't Make Beans

New York, NYWhile the recent move to grinding coffee beans will give Starbucks locations that freshly-ground aroma reminiscent of an old-fashioned coffee shop, there is a new smell wafting throughout the chain, and to some it stinks. To others, it's an odor they can live with. Others still, just don't know what to make of it. To all, the tip-sharing issue will not go away anytime soon.

At issue is the allegation that proceeds from a tip jar that is a fixture at every one of the 7000 Starbucks locations in the US, are pooled with workers, baristas (servers) as well as shift supervisors. The latter job lay at the center of the issue. In other words, is a shift supervisor a true agent of management, or no? That appears subject to interpretation. However, in the eyes of the law in some states, and according to the language of that law, it would appear that shift supervisors—who appear to make little more than baristas but have numerous supervisory roles and responsibilities—are not entitled to a share of the tips.

All this comes tethered to news of an award granted last month in California, the result of a class action lawsuit against Starbucks alleging that the chain allowed shift supervisors, and therefore management, to share in the tips of lower-paid workers. A state judge awarded baristas $105 million dollars after finding that the company had, according to California state law, improperly allowed shift supers to share in the weekly tip pool.
The California suit was first brought in 2004 and granted class action status in 2006. In late March of this year, San Diego Superior Court Judge Patricia Cowett ordered Starbucks to pay baristas more than $100 million in back tips and interest.

It was reported that Starbucks planned to appeal the ruling, and while that appeal is at play, has decided not to act on the order.

Meantime, the California ruling appears to have paved the way for a similar lawsuit filed last Thursday in United States District Court in Manhattan, alleging a vastly similar issue. The latest effort has been brought by former barista Jeana Barenboim, of Brooklyn New York, who accuses Starbucks of violating a state law that suggests no employer, or agent of an employer can accept, directly or indirectly, part of an employees' tips.

Anyone with any cursory knowledge of the restaurant industry will know that waiters, servers and other similarly-classed individuals are paid what some might describe as a starvation hourly wage, given the expectation that tips will make up the difference. A good waiter or server can earn some pretty decent coin in tips. Employers knowing this fact feel somewhat justified paying a low hourly wage, knowing that tips for exemplary service will bolster an employee's coffers.

Conversely, it is assumed that restaurant managers, and their agents are paid a wage demonstrative of their job and status, and therefore tips will not be coming their way.

At Starbucks, it appears that the role of shift supervisor is somewhat of a gray area, in that they present, and carry out many of the jobs usually associated with a managerial position, but lacking the compensation many might expect to be associated with that position. According to a Starbucks barista living and working in New York City, shift supers handle cash, keys, and manage the location when the actual managers are not present on premises. Shift supers also participate in performance reviews, and have the authority to discipline staff, the barista says.

In this sense, the shift supervisor presents very much like a manager, or an agent of management. However, it has been reported that the level of compensation is so close to that of a typical barista that the distinction is almost non-existent. The barista interviewed, Liberte Locke who works at a Starbucks location in Union Square East, reported in the New York Times that she earned $10.03 per hour after three years on the job, whereas a shift super with whom she regularly works earns $10.25 per hour, after three years of service.

Some have suggested that the real issue, is that Starbucks fails to adequately compensate their shift supervisors for the responsibility entrusted to them; that the issue would be resolved if shift supers were fairly compensated, and were then therefore barred from taking any proceeds from the pooled contents of the weekly tip jar, according to the letter of the law.

The latter was the basis for the class action lawsuit, and the subsequent award in the state of California, together with the current lawsuit launched in New York State. The argument made by the plaintiffs is that according to state law, management or agents of management are barred from receiving pooled tips intended for front-line workers. The allegation, and interpretation, is that shift supervisors are, indeed agents of management, and therefore should be barred from tip proceeds.

Starbucks allegedly doesn't see it that way. In a voice-mail message to employees two weeks ago, Starbucks Chairman and CEO Howard Schultz called the California ruling "extremely unfair and beyond reason...I want to personally let you know that we would never condone any type of behavior that would lead anyone to conclude that we would take money from our people," Schultz said.

While a key argument, and point of debate will most assuredly be what a shift supervisor IS and ISN'T, the fact remains that the letter of the law must be respected, regardless of interpretation. And if you feel, as a low-paid front-line server, that you are losing out on an important source of your income to the hands of a manager, or an agent of management, you could be eligible to join a class action and pursue the losses you have allegedly incurred.