Monday, November 26, 2012

Starbucks Loses Another Major Tip Pooling Case, Must Pay $14 Million

Starbucks is appealing a court in Massachusett's award of $14 million to Starbucks baristas who worked for the coffee giant in Massachusetts from 2005 and 2011.  Starbucks lost its argument that shift supervisors should be classified as wait staff and partake in shared tips because they have no actual “managerial responsibility,” Justice News Flash reports.

From the article on the appeal:  
In January 2012, Judge Nathaniel Gorton made his final ruling, awarding the plaintiffs $7.5 million in damages, as well as prejudgment interest at a rate of 12 percent per annum. The plaintiffs were also awarded triple damages for more recent violations, totaling $6.6 million that were made mandatory by current state wage-and-hour claims, as amended in July 2008. 
Starbucks maintains that their shift supervisors are correctly classified as “wait staff,” because they only have “limited supervisory” tasks and no actual “managerial responsibility.” The coffeehouse giant also asserts that the ruling is contradictory to the law on tips in Massachusetts, which is to ensure that service employees are the ones that receive the tips from customers. Furthermore, they claim that the plaintiffs named in the lawsuit don’t actually represent the interests of the numerous former baristas that have been promoted to shift supervisors and who now reap the benefits of the current tip policy. 
In addition, Starbucks maintains that the court erred with the treble damages provision because the law allows punitive damages without showing that the punished conduct was reprehensible.
In typical employee misclassification cases employers do the opposite and claim employees who should be classified as hourly staff is management to skirt around paying overtime but in this case Starbucks did the opposite and claimed members of management were akin to hourly staff.

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