Second Circuit Sends Starbucks Tips Dispute to New York Court with Questions

The Second Circuit Court of Appeals has certified to the New York Court of
Appeals questions arising under state employment law in a dispute over the
distribution of tips in Starbucks stores. Barenboim v. Starbucks Corp., No.
10-4912; Winans v. Starbucks Corp., No. 11-3199 (2d Cir., questions certified
October 23, 2012).

A federal district court determined that Starbucks properly distributed pooled tips to shift supervisors and that Starbucks was not required to include assistant store managers in its tip pools. The appellants in the consolidated appeals are a putative class of baristas who allege that shift supervisors are “agents” under New York Labor Law § 196-d and ineligible to share tips, and a putative class of assistant store managers who claim they are entitled to share in the tip pools because they perform the same tasks as baristas and have only limited management authority.

The plaintiffs in both cases sought review before the Second Circuit of the
lower court’s decision granting Starbucks’ motions for summary judgment.
According to the appeals court, the plaintiffs have raised novel questions
under New York law; thus, the court deferred decision and certified the
following questions to the New York Court of Appeals:

What factors determine whether an employee is an “agent” of his
employer under state law and thus ineligible to receive distributions
from an employer-mandated tip pool? Is the degree of supervisory
or managerial authority exercised by an employee relevant to
whether the employee is a “manager or supervisor” and thus an
employer’s “agent”? If an employee with supervisory or managerial
authority renders services that generate gratuities contributed to a
tip pool, does New York law preclude that employee from sharing
the pool? To the extent that “employer or his agent” is ambiguous
under the statute, does the Department of Labor’s New York State
Hospitality Wage Order reasonably interpret the statute and govern
this dispute? If so, does the order apply retroactively?

Does New York labor law permit an employer to exclude an otherwise
eligible tip-earning employee from receiving distributions from
an employer-mandated tip pool?

The Second Circuit invites New York’s high court to expand these inquiries “to
address any further pertinent question of New York law as it might pertain to
the particular circumstances presented in these appeals.”