A California court yesterday ordered Starbucks to pay almost $106 million to approximately 120,000 baristas because supervisors were unlawfully allowed to share tips left by customers.

The lawsuit was filed in 2004 by Jou Chou, who complained that supervisors were unfairly sharing in employee tips.  California law prohibits owners, managers and other company “agents” from tip-sharing.  The suit gained momentum in 2006 when it was granted class action status.

Starbucks argued that its shift supervisors weren’t covered by the law and should share the tips because they perform many of the same tasks as baristas.  The judge disagreed, ordering the company to make restitution going back eight years and indicating that she will issue an injunction to prevent future tip-sharing.

“I feel vindicated,” Chou said.  “Tips really help those receiving the lowest wages. I think Starbucks should pay shift supervisors higher wages instead of taking money from the tip pool.”

Starbucks vehemently disagreed.  The company says it plans an immediate appeal and called the decision “fundamentally unfair and beyond all common sense and reason” and “an extreme example of the abuse of class-action procedures in California courts.”

A hearing set for May 1 will determine how the money will be divided among the class members and how much their attorneys get.  Stay tuned.

This entry was posted on Friday, March 21st, 2008 at 8:42 am and is filed under Class Actions, Employment Law News, Litigation, Tips, Wage and Hour. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.