Starbucks Tip-Pooling is Illegal in Massachusetts - U.S. First Circuit
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Starbucks Tip-Pooling is Illegal in Massachusetts

Reading this case, we get the idea that the Boston-based First Circuit Court of Appeals is not a big fan of Starbucks. That's not particularly surprising, given that Beantown is better known for Dunkin' Donuts.

Starbucks employees — or "partners" in the company lingo — are divided into four subcategories: store managers, assistant managers, shift supervisors, and baristas. Both shift supervisors and baristas are hourly wage employees, often working part-time. Baristas are frontline employees who serve food and beverages to customers; shift supervisors perform those functions and other functions as well. Shift supervisors are usually promoted from the ranks of baristas.

Under Starbucks' company policy, stores maintain tips containers in which customers may deposit tips. The accumulated tips are distributed weekly to baristas and shift supervisors within a store in proportion to the number of hours worked that week by each individual.

A group of Massachusetts baristas sued Starbucks, alleging that the policy violated the Massachusetts Tips Act because it allowed shift supervisors to share in the pooled gratuities. The case evolved into a federal class action lawsuit.

The district court granted class certification and partial summary judgment in the plaintiffs' favor with regard to the Tips Act count, and entered a $14,126,542 judgment for the plaintiff class.

Starbucks appealed, arguing that the district court "took too crabbed a view in holding that the company's tip-pooling policy violated the Tips Act because shift supervisors were included among the beneficiaries of the tips pools." The First Circuit, however, was equally crabbed. (See aforementioned disdain for Starbucks.)

The Tips Act provides that "wait staff" employees shall not be required to share tips with anyone who is not a "wait staff employee." Under the Act, a wait staff employee is a person, including a waiter, waitress, bus person, and counter staff, who: (1) serves beverages or prepared food directly to patrons, or who clears patrons' tables; (2) works in a restaurant, banquet facility, or other place where prepared food or beverages are served; and (3) who has no managerial responsibility.

Starbucks argued that shift supervisors performed "limited supervisory tasks," but that those tasks didn't rise to the level of "managerial responsibility."

The First Circuit disagreed, concluding, "'No' means 'no,' and we interpret that easily understood word in its ordinary sense: 'not any' ... Unless we are prepared to ignore both the legislature's use of the word "no" and the commonly accepted meaning of that word -- and we are not -- it follows that if an employee has any managerial responsibility, she does not qualify as 'wait staff' eligible to participate in tips pools under the provisions of the Tips Act."

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