On Wednesday, I posted about a recent Supreme Court decision discussing who is a supervisor. On the same day, the New York Court of Appeals (the highest court for the state), issued an opinion regarding that same question but in a different context.
Starbucks is currently involved in two lawsuits over its practice of pooling tips, and the tip jars that are on all of the counters. The money collected in those jars is distributed to the baristas and the shift supervisors, based upon the number of hours worked in a given week. Some of the baristas sued, claiming that the shift supervisors were ineligible. On the tails of that lawsuit, a second one was filed by assistant store managers, claiming that they should be part of the tip pool. The cases made their way to the Second Circuit Court of Appeals, which asked the New York Court of Appeals for an advisory opinion regarding the language in Labor Law section 196-d
The opinion first lays out the duties of the four levels of personnel at Starbucks. Baristas are the front-line staff who take orders and serve drinks. Shift supervisors, the next level up, are primarily front-line staff; however, they do have the ability to serve in a limited management role – if a higher-level manager is not present, they can open or close the store, or close out the registers in the evening. They also have the power to assign the baristas to stations during the shift and can provide some feedback to baristas. Assistant store managers have the ability to set shifts, hire and fire employees, approve payroll and handle employee discipline. While they also are in primarily customer-service roles, they have additional powers over all other employees. The store manager is in charge of the entire operation. The court also noted that, unlike baristas or shift supervisors, assistant store managers are full-time, salaried employees who qualify for benefits and bonuses.
The court then discusses whether shift supervisors or assistant store managers are considered “agents” of the company, who would be ineligible for sharing in the tips. Because of the duties assigned to them, shift supervisors are not considered to be agents, but assistant store managers are. Without referencing the Supreme Court’s decision issued shortly before this was released, the New York Court of Appeals came to a similar conclusion. A supervisor, who is ineligible for a tip pool, is an employee who has the authority to make major employment decisions.
This decision will be important when looked at in conjunction with the Supreme Court decision in Vance. It will also be important, however, for restaurants, as it limits the ability of owners and managers, who may also be waiting on tables, from accepting the tips that they are given. Restaurants will need to come up with policies for handling these issues. Stores with tip jars will also need to ensure that only employees, and not supervisors, are sharing in pooled tips.