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US: CALIFORNIA $100 million tip for Starbucks servers

Judge says baristas shouldn't have to split take with bosses

by Bob Egelko, Chronicle Staff WriterThe San Francisco Chronicle
March 21st, 2008

(03-20) 17:36 PDT SAN DIEGO -- A San Diego judge ordered Starbucks to pour more than $100 million into the accounts of its low-wage coffee-servers in California on Thursday after ruling that the company had improperly required the workers to share tips with their bosses.

Superior Court Judge Patricia Cowett ruled Feb. 28 that Starbucks' shift supervisors were managers in the company, and therefore ineligible to be paid out of the tip jar. On Thursday, she assessed the damages: $86.7 million, plus 7 percent annual interest, for all servers - known as baristas - who have worked at any of the chain's 1,400 California stores since Oct. 8, 2000.

Plaintiffs' lawyers said the grand total was $105.8 million. They can seek additional amounts in attorneys' fees.

Cowett also said she would issue an injunction prohibiting Starbucks from allowing shift supervisors to share in the tip pool, the company's practice until now.

"We hope this verdict will help other entry-level service workers by ensuring that employers cannot flout California law and use tips to pay supervisors," said David Lowe, a San Francisco attorney who represented baristas in the class-action lawsuit that led to the ruling.

Lowe estimated that more than 120,000 past and present employees would share in the damages. Lead plaintiff Jou Chau, a college student who worked for Starbucks in San Diego and Riverside counties in 2003 and 2004, said in a statement through his lawyers that he felt vindicated.

"Tips really help those receiving the lowest wages," Chau said. "I think Starbucks should pay shift supervisors higher wages instead of taking money from the tip pool."

At a Starbucks on Fourth and Mission streets in San Francisco, Glenda Guzman, one of two baristas working the afternoon shift, said she hadn't minded sharing tips with supervisors because sometimes they worked the cash register and brewed the coffee.

"It's a team thing," she said. "We're all partners."

Kris Neslund of San Francisco, a customer interviewed while sipping a cup of coffee, said he had always "assumed tips go to non-management-type folks, but who knows?"

Starbucks said it would appeal and seek a stay that would leave its tip-pooling system in place while a higher court reviews the case.

"Starbucks believes that our shift supervisors deserve their fair share of the tips," the Seattle company said in a statement. It said Cowett "did not even address the obvious unfairness to our shift supervisors," whose interests "were not represented in this litigation."

California law allows employers to pool tips and divide them among food servers but denies a share to a company's owners, managers or supervisors. Lowe said shift supervisors at Starbucks serve coffee and food but also control the work of baristas, and are paid between $1.50 and $2.65 more an hour.

Cowett ruled last month that shift supervisors must be considered managers, and thus ineligible for tips, because they direct the baristas.

Lowe said Starbucks would have to pay the damages out of its own corporate pockets, rather than penalizing the supervisors for the tips they have already collected. He said the judge left the company free to adjust its wages in the future.

"We would hope that Starbucks would not retaliate by reducing wages of the baristas," the attorney said. He said the company also shouldn't punish shift supervisors for the ruling, but should instead raise their hourly wages or pay them bonuses based on the tips generated during their shifts to compensate for their lost share of the tip pool.

Chronicle staff writer Steve Rubenstein contributed to this report. E-mail Bob Egelko at begelko@sfchronicle.com.





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