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Chau v. Starbucks (Cal. Ct. App. - June 2, 2009)

By Shaun Martin

When you leave money in the tip jar at Starbucks, to whom are you leaving it? And who may permissibly recieve it; in particular, can the company command that the store manager ("shift supervisor") gets a cut?

The general rule in California is that the company can't take a cut of tips from its employees and give the dough to their agent (e.g., the manager). Judge Cowatt, down here in San Diego, followed this general rule, and in a suit brought against Starbucks on behalf of its California baristas, awarded the employee class 86 million plus. But, today, in an opinion by Justice Haller, the California Court of Appeal reverses, and orders judgment entered on behalf of Starbucks.

Yes, the Court of Appeal said, if you give your tip directly to a particular employee, they get to keep it. But if you give a "collective" tip -- e.g., into a tip jar -- that's tipping everyone, including supervisors. Or at least that is what we believe, and on the basis thereof, we're going to allow Starbucks to require that these tips be shared with managers. (Parenthetically, as here, we're also going to allow Starbucks to highly regulate tipping, and to dictate where and how the tip jar is displayed -- which will ensure that the tips indeed flow to the manager and not exclusively to the employees.)

This is definitely a case in which social norms are relevant; indeed, dispositive. Which raises interesting issues about how judges know (and explain) these norms, particularly when judges may disagree about them. But I'll leave that discourse for another time.

For now, just know that if you were ever a barista at a California Starbucks after 2000, today was not a good day for you. You lost some money that you otherwise had coming to you.

Full post as published by California Appellate Report on June 02, 2009 (boomark / email).