First Circuit to Starbucks: No Means No, Tips are for Baristas Only

| Marcus, Ellen

In an opinion that we have been awaiting, late last week, the U.S. Court of Appeals for the First Circuit affirmed the Massachusetts federal court’s ruling that Starbucks violated the Massachusetts Tip Act by requiring baristas to share with shift supervisors tips left by customers.  The First Circuit agreed with the lower court that Starbucks shift supervisors have some managerial responsibilities and therefore cannot share in the tips.  The Tip Act prohibits employers from requiring “wait staff employees” – who are defined in the Act as having “no managerial responsibility” and whom the parties agreed include Starbucks baristas – from sharing tips with anyone who is not a wait staff employee.   Starbucks argued that its shift supervisors have no managerial responsibility because, just like baristas, they spend the vast majority of their time serving customers.  The First Circuit wasn’t buying it, noting that the Act has a bright-line test for defining wait staff employees, that the “no”  in “no managerial responsibility” means “no,” and that shift supervisors do not pass the test because they are, for example, “charged with opening and closing the store, handling and accounting for cash, and ensuring that baristas take their scheduled breaks.”  The court also said that Starbucks’ internal documents explaining that shift supervisors “‘directly manage’ three to six other employees while on shift” were “potent evidence” against Starbucks.  The First Circuit also left intact the lower court’s certification of a class of Massachusetts baristas and its award of damages to them of over $14 million – which includes $7.5 million in tips that Starbucks allocated to shift supervisors.  We are still on the lookout for how the New York Court of Appeals will rule in a similar case challenging Starbucks’ tip pooling practices under New York Law.