New York Court Considers Who Can Dip Into Starbucks Tip Jars

A New York legal battle involving Starbucks tip jars could have wide-ranging consequences regarding what types of employees may be entitled to take home the tips. The New York Court of Appeals has been asked by a federal court to help clarify the definition of an employer’s “agent” in the state’s labor laws, in order to determine whether assistant managers and shift supervisors are entitled to tips.

The legal battle pits assistant managers, who are typically salaried and can earn incentives not available to their subordinates, against baristas and shift supervisors, who are arguing that they deserve tips since they spend much of their time at work serving customers. Under New York labor laws, as well as those in many other states, an assistant manager may not be entitled to tips because of their official capacity as the company’s “agent.”

“Starbucks has not seriously disputed that its shift supervisors are supervisors,” attorney Shannon Liss-Riordan, representing the baristas, wrote in her brief.

The appellate court heard arguments yesterday, and testimony will continue today as the court seeks to answer two fundamental questions: What factors determine whether an employee is an agent of the company? And, Does state law permit an employer to exclude an otherwise eligible tip-earning employee from sharing in such a tip pool?