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September 2011 Archives

September 25, 2011

Collective Tip Box Putative Class Action Against Starbucks Dismissed

In Winans v. Starbucks Corp., 2011 U.S. Dist. LEXIS 76066, 2011 WL 2693172 (S.D.N.Y. July 11, 2011), Plaintiffs, former Assistant Store Managers at various New York Starbucks, brought a state-wide class action lawsuit on behalf of all Assistant Store Managers. . They claimed that Starbucks violated New York Labor Law § 196-d by not allowing them to participate in distributions from collective tip boxes. New York Labor Law § 196-d prohibits employers, their agents or any other person from demanding, accepting or retaining any part of a gratuity received by or meant for an employee. See N.Y. Lab. Law § 196-d (McKinney 2009). The Court, holding that Plaintiffs did not have a right to participate in the collective tip box proceeds, granted Starbucks' motion for summary judgment.

There are four categories of employees at Starbucks: Baristas and Shift supervisors, who are part-time hourly employees that primarily handle customer service tasks; and Assistant Store Managers and Store Managers, who are full-time employees and who are eligible for certain benefits (e.g., holiday and sick pay and life insurance) that the part-time employees do not receive. Assistant Store Managers are responsible for hiring recommendations and other managerial tasks, however, like the Baristas and Shift Supervisors, they also perform customer service tasks.

Starbucks has a written policy governing the collection, storage and distribution of tips (the "Tip Policy"). Each store is required to place a collective tip box near the cash register. The Tip Policy allows only Baristas and Shift Supervisors to handle and receive the proceeds from the collective tip boxes. Every week a Shift Supervisor or Barista calculates the weekly tip totals and apportions the money to the Shift Supervisors or Baristas according to the number of hours each worked in that week. The Tip Policy does not address the handling of tips that customers give directly to employees.

Plaintiffs alleged that although their title was "Assistant Store Manager", their customer service duties rendered them similar to Barista and Shift Supervisor employees, which made them eligible under the statute to share in the collective tip box money. Plaintiffs also claimed that customers expected tips to be shared among all employees who served them, not just the part-time employees. Thus, Starbucks' Tip Policy violated the statute because it had the effect of demanding or redistributing the Assistant Store Managers' share of the tips. In addition, Plaintiffs contended that Starbucks violated the statute by compelling them to contribute tip money handed directly to them to the collective tip box.

The Court explained that § 196-d was enacted to prevent the unfair and deceptive practice of an employer retaining money paid by a patron under the impression that he/she was giving the tip to the employee and not to the employer. Accordingly, this statute prevents employers from retaining any portion of an employee's tips and from participating in their employees' tip pools.

Assuming, without deciding that Assistant Store Managers were similar to Baristas and Shift Supervisors (and therefore eligible to share in tips), the Court found that Plaintiffs could not demonstrate that they had a "right" to participate in the collective tip box proceeds. Relying on clear and unambiguous language of the statute, the Court explained that § 196-d did not grant all employees the right to participate in tip pools or to receive proceeds from such pools. Instead, the statute merely defined who was eligible and who was not eligible. And, according to the Court, being eligible to participate did not mean that any specific employee was entitled to participate in a tip pool and share in the proceeds. Thus, the Tip Policy, which did not allow Starbucks to retain any of the collective tip box proceeds for itself and merely directed who was eligible to share in the proceeds, did not violate the plain language of the statute.

In addition, the Court also found that Plaintiffs did not proffer specific facts in support of their claim that Starbucks forced them to relinquish tips handed directly to them. In support of this finding, the Court explained that Starbucks does not have a written policy with respect to tips handed directly to employees and that Plaintiffs did not demonstrate that Starbucks required them to put these personal tips in the collective tip boxes. Instead, Plaintiffs' "feeling" that they were expected to put the tips in the collective tip box -- because "it was the right thing to do" -- was insufficient to establish an issue of fact as to whether Starbucks violated the statute.


Mark J. Lemire, Esq.

About September 2011

This page contains all entries posted to Business Torts and Employment Litigation Blog in September 2011. They are listed from oldest to newest.

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