The New York State Court of Appeals issued an opinion Wednesday that gives Starbucks a significant leg up in a class-action lawsuit that challenges whether shift supervisors can share in tips.

In an advisory opinion — not a ruling — that now sends the argument back to the federal Court of Appeals for the Second Circuit, the state’s highest court clarified the legal standard that would determine which employees can share in tips under state law. Labor law in New York prohibits managers or their “agents” from taking gratuities meant for employees.

In one of two cases before the court, Starbucks baristas argued that shift supervisors should not be allowed to share in tips because they have managerial duties.

A second case, filed by Starbucks assistant managers, argued that they should also be able to participate in tip pools — a practice that the Seattle-based coffee company has prohibited because they are seen as managers.

In Wednesday’s opinion, the Court of Appeals agreed with Starbucks, saying shift supervisors, and not assistant managers, could be considered eligible for tip pools.

Assistant managers, as salaried employees, clearly have authority over others, the opinion stated. However, shift supervisors, who are hourly workers like baristas, do not have enough authority to disqualify them from sharing in tips, it said.

The cases now return to the Second Circuit, where the opinion will be applied.

Starbucks officials said they were pleased that the Court of Appeals agreed with earlier court rulings in the coffee company’s favor.

“We’re pleased with what has been determined by the New York Court of Appeals today and essentially finding that Starbucks’ tip pooling policy is fair under New York law,” said Jaime Riley, a spokeswoman for Starbucks. “We wanted to make sure that our shift supervisors, who spend over 90 percent of their time in customer service, could be a part of tip pools.”

Shannon Liss-Riordan, an attorney representing the baristas in the shift supervisor case, said she was disappointed that the court rejected the more-stringent standard for defining supervisory authority, saying the opinion doesn’t follow the language of the legislature that defines supervisors as agents.

Starbucks shift supervisors do have meaningful control over other employees, said Liss-Riordan, including running the shift, telling baristas when they can take breaks and taking note of barista mistakes.

Rather than set a “clear bright line” to define the standard, the opinion “blurred the line,” said Liss-Riordan.

Starbucks settled a similar class-action suit filed by baristas in Massachusetts after a federal court ruling late last year prohibited shift supervisors from sharing in tips. The coffee company later restructured the shift supervisor position there to comply with the ruling.

In California, however, an appeals court decision there allowed Starbucks’ tip-pooling policy to remain intact, allowing shift supervisors to share in collective gratuities.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout