You know those little tip jars often found on the counter at coffee shops like Starbucks? You’ve probably assumed that any tips are divided among the workers at the end of the shift. Apparently, that isn’t quite true.
The U.S. Court of Appeals for the First Circuit ruled this week that Starbucks’ tip sharing policy violates the Massachusetts Tips Act because it requires baristas to share their tips with shift supervisors. The court also upheld a $14.1 million award against Starbucks for the violations.
Tip skimming — the illegal practice of requiring low-level employees who receive tips for their service to fork over a share of those tips to their employers — has recently become a hot topic in employment law litigation across the country. While Minnesota is in the Eighth Circuit, Minnesota courts may take this decision very seriously by because the issues involved in are quite similar to what they would be in a Minnesota case.
Minnesota doesn’t have a specific “Tips Act” like Massachusetts, but the Minnesota Fair Labor Standards Act is clear that managers are not allowed to share in workers’ tips. Management cannot take a share of employee tips, even as a credit against the minimum wage or as reimbursement for lost or damaged property. They also cannot participate in tip sharing agreements among employees.
In Massachusetts, Starbucks tried to argue that the law was unclear about whether “shift supervisors,” who act as baristas during about 90 percent their shifts but who have supervisory duties, qualified as managers who would be prohibited from tip skimming. The response to that argument was a resounding no:
“The Tips Act states unequivocally that only employees who possess ‘no managerial responsibility’ may qualify as ‘wait staff’…. ‘[N]o’ means ‘no,’ and we interpret that easily understood word in its ordinary sense: ‘not any.'”
Under Massachusetts’ Tips Act as under Minnesota law, employers who skim tips are required to reimburse workers for the amount illegally taken. Under the Massachusetts Wage Act, however, employers are required to pay workers three times the actual amount of the diverted tips. So, Starbucks now owes a class of Massachusetts baristas a total of $14.1 million.
- ABA Journal, “No means no, entitling Starbucks baristas to $14m,” Debra Cassens Weiss, Nov. 13, 2012
- Matamoros v. Starbucks Corp., U.S. Court of Appeals for the First Circuit, Nos. 12-1189 and 12-1277, Nov. 9, 2012
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