SAN FRANCISCO, CA. (April 9, 2008) ? Employers in a variety of industries where employees receive tips should expect court challenges to their tip practices in the wake of several recent high-profile rulings, caution attorneys from Jackson Lewis LLP, one of the country's largest workplace law firms.
A California Superior Court judge recently awarded $105 million against Starbucks Corporation for unlawfully allowing shift supervisors to share in a portion of tips left in tip jars for baristas. A Massachusetts verdict against American Airlines earlier this week awarded $325,000 in lost tips to skycaps. Employers of workers ranging from hotel housekeepers, bell persons and door persons to casino workers to restaurant servers and others should review their tip plans with counsel as Jackson Lewis attorneys anticipate tip challenges may form another wave in the wage-hour class action tsunami that has hit the nation.
"This is not just a California issue; the entire tipping industry might soon be affected. As tip pooling lawsuits continue to grow in number across the country and employers subsequently have to shell out millions of dollars, the practice could become a thing of the past," said Paul DeCamp, former Administrator of the U.S. Department of Labor's Wage and Hour Division and current co-chair of Jackson Lewis' Wage and Hour Practice Group.
DeCamp adds, "What makes the Starbucks decision difficult for employers in this industry is that shift supervisors commonly function in different roles at different times."
The Starbucks lawsuit focused on an interpretation of California's Labor Code regarding the payment of tips to employees and the practice of tip pooling. Labor Code Section 351 provides, "No employer or agent shall collect, take or receive any gratuity or a part thereof that is paid, given to or left for an employee by a patron," and Labor Code Section 350 defines "agent" as "every person other than the employer having the authority to hire or discharge any employee or supervise, direct or control the acts of employees."
While Starbucks shift supervisors were paid more per hour than baristas, they shared customer service responsibilities such as making coffee, working the register and serving customers. In addition, shift supervisors were responsible for scheduling workers and directing work flow ? based on these additional responsibilities, the court ruled that the shift supervisors were "agents" and thus not entitled to share in the tips.
DeCamp cautioned that "applying Section 351 to bar participation in tip pools for non-exempt hourly workers who spend most of their time doing the same tip-generating tasks as their co-workers is bad law and terrible public policy. Let's not forget who these shift supervisors really are ? hourly workers who spend nearly all of their time making coffee and devote a few minutes a week to writing up schedules."
Similar lawsuits against Starbucks by former employees have since been filed in New York, Massachusetts and Minnesota.
A Massachusetts jury awarded more than $325,000 to nine American Airlines skycaps who claimed they had been denied tips after the airline began charging $2 for curbside check-ins in a verdict rendered April 7, 2008. The plaintiffs in Di Fiore, et al. v. American Airlines, Inc., Case No. 07-10070 in the U.S. District Court for Massachusetts, contended among other things that the surcharge violated Massachusetts tips law. Attorneys for those plaintiffs have said they plan to file a similar action against U.S. Airways in Pennsylvania on behalf of 3,000 skycaps across the nation.
"It is essential that all employers who use tip pooling work their way through their state's wage-hour law regulations to identify where they may be vulnerable," urges Rob Pattison, Managing Partner of Jackson Lewis' San Francisco office. "Jackson Lewis can assist companies across the country in these self-audits."
Jackson Lewis attorneys will be monitoring the progress of the California Starbucks case on appeal as well as the progress of other tip and tip pooling cases. Jackson Lewis attorneys also are available to answer inquiries about achieving wage hour compliance in California and nationwide. For more information on Chou v. Starbucks Corp. or the Wage and Hour Practice Group at Jackson Lewis, please click here.
About Jackson Lewis LLPFounded in 1958, Jackson Lewis LLP is dedicated to representing management exclusively in workplace law. With offices in 34 cities and more than 470 attorneys, Jackson Lewis has developed a concentrated expertise in over 17 specialized practice areas of the law. Additional information about Jackson Lewis LLP can be found at www.jacksonlewis.com.