Recently, the New York Court of Appeals handed down a ruling that supported a tip pool policy which will affect thousands of tipped restaurant and hospitality workers such as waiters, waitresses, bartenders, and barbacks in New York City.
The U.S. Department of Labor states that tips are the sole property of the employee and cannot be shared with employers or with those who would not customarily receive tips. In other words, a tip pool can only be valid if it is shared among employees who are regularly tipped.
New York State Labor Law also includes provisions about who can keep gratuities: “No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee.”
According to Starbucks’ tip pool policy, tips were to be regularly collected and distributed to baristas and shift supervisors according to the amount of hours they worked. This case, Barenboim v. Starbucks Corporation, was first brought in 2008 by two former Starbucks baristas who alleged that including shift supervisors in the tip pool was a violation of New York Labor Law. Starbucks employs four categories of employees at their restaurants: baristas, shift supervisors, assistant managers, and store managers. As explained in the Court’s decision, baristas are responsible for “taking orders, making and serving the company’s coffee, tea and food offerings, operating the cash register, cleaning tables and stocking product.” The Court explained that shift supervisors, a position that can be earned after six months of employment as a barista, share many of the same responsibilities as baristas. Shift supervisors, however, have some added responsibilities like “assigning baristas to particular positions during their shifts, directing the flow of customers and providing baristas with feedback about their performance…(they also) open and close stores, change the cash register tills and, if neither an assistant store manager nor store manager is present, make bank deposits.”
In its decision, the Court ruled that because barista and shift supervisor duties were so similar, Starbucks’ policy of including shift supervisors in tip pools was legal. Shift supervisors, the Court stated, have only “limited supervisory responsibilities.” The Court also agreed with Starbucks that assistant managers and store managers should be prohibited from accepting tips.
If you are a server, busboy, barback, barista, shift supervisor or other regularly tipped employee and believe that your employer may be implementing an illegal tip pool policy, you may be entitled to compensation; contact an attorney with experience in wage and hour laws.