Here’s a second case about an employer who skirted the law. One of the major questions involving tips is the degree to which management gets a piece of the action. A recent federal District Court decision in Massachusetts (Hernan Matamoras v. Starbucks) has followed the trend of the US Department of Labor and many other states by prohibiting an employer from pooling tips with management-level employees. The giant coffee shop chain ended up having to pay to its baristas a bonus because it had allowed shift supervisors, who acted as baristas roughly 90% of the time, to share in the tip pooling. The court stated, “Stripped of rhetorical flourishes, Starbucks’ position invites us to repudiate both the precise language and the clear intent of the 2004 amendments and to resurrect the primary duty test. We decline the invitation.” Even if the supervisors spent only 10% of their time managing, the fact that they were managers barred them completely from sharing any tips.
For more information on tipping, see the FLSA memo and position paper, as well as guidelines from the California Department of Industrial Relations
Please refer to the BNA state law summary for your state on HR in the compensation area of HR That Works.