Starbucks (NYSE: SBUX) lost a class-action lawsuit, according to this article, centering on the sharing of tips between baristas and shift supervisors. Erstwhile barista Jou Chou filed the legal complaint in 2004. Class-action status was eventually granted, a move which then involved up to 100,000 employees in the company's California coffehouses. San Diego Superior Court Judge Patricia Cowett doesn't believe that employees in managerial positions should share in tips given to the baristas, and she paved the way for $100 million in back gratuities to be distributed to those so affected.
Naturally, Starbucks disagrees with this ruling and will appeal. A spokeswoman for the company, Valerie O'Neil, says this is nothing more than an example of "abuse of the class-action procedures in California's courts." This is a confusing issue, to say the least; shift supervisors do find themselves sometimes serving coffee to patrons. However, it seems, in my opinion at least, that the judge is correct in her interpretation of California law -- tip pooling cannot benefit those in managerial positions. We all know why it is done -- tips essentially subsidize the pay of supervisors/managers, and this is a beneficial thing for Starbucks.
However, I believe Starbucks is on the wrong end of this argument. It's too bad; Starbucks right now is fighting to regain the regal java status it once took for granted. Nowadays, joints like McDonald's (NYSE: MCD), Burger King (NYSE: BKC), and, of course, Dunkin' Donuts, are vigorously competing for their share of the coffee spoils. I don't drink coffee, but I know that there is money in the stuff, and that's why I think that, with all of its current troubles, Starbucks should work to put this legal action behind it so that it can concentrate on the bigger issue of significant sustainable growth. The negative publicity is a concern, and although this distraction won't, by itself, derail Starbucks, it is still nevertheless a distraction.
Disclosure: I don't own any shares of any company mentioned here; positions can change at any time.











Reader Comments (Page 1 of 1)
3-21-2008 @ 10:03AM
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3-22-2008 @ 12:16AM
leslie said...
Okay, this may be silly to argue the issue, but I feel compelled to as a Starbucks shift supervisor (outside California). I don't know all the details of the lawsuit, as I heard about it today after the ruling, but it is, regardless, unfair to call this matter a black and white ruling.
The interests of the shift supervisors were not addressed in the lawsuit, which is Starbucks primary reason for appeal. (Well, second. I'm sure their reluctance to pay $106 mil comes first.)
Anyway, shift supervisors in the Starbucks company are NOT managers. We do not "sometimes" serve a cup of coffee. In an average retail environment, a shift would oversee all the other workers and that'd be it, but at Starbucks there can be as few as 2 employees in the store at a given time. In fact, at my store there's only ever 3 employees from 7-11:30 am. The rest of the day, there's one Barista and one Shift. The result is that the shift supervisor is hardly different from a barista. We do the exact same tasks as the barista for the same percentage of our shifts. Not sometimes serving coffee, but constantly.
The only way our job is different is that we ALSO have to handle cash management and make customer service decisions. We are not salaried, we get no added benifits. Oh, and we usually work longer shifts. So, if we are on the floor for the same amount of time, serving the same number of customers as the average barista, then it is unfair to deny them the tips they work for. It makes more sense for Starbucks to change the name they call these employees than it does to say they have to be super-baristas and not reap the same benefits.
3-22-2008 @ 11:15AM
mary said...
I'm just curious of the difference in pay for both positions...I am a nurse who has worked in a managerial position and the work was endless and the hours stunk, but I felt my company paid me well, so it wasn't really an issue.
3-22-2008 @ 2:47PM
lita said...
I agree with Leslie. I am also a non-California shift supervisor, and (unless they do it differently in California) shifts do the exact same job as baristas, with the added stresses of running the floor and managing the money. We are not ASMs or SMs; we are not guaranteed 40 hours a week on salary. We do not spend our time off the floor doing administrative tasks. We are out there, on the front lines, 90% of the time.
We make barely a dollar more per hour than your average barista, but we are fully responsible for anything that happens on our watch, both operationally and in regard to customer service. To say that we are not entitled to a share of what we help to earn is ridiculous.
3-22-2008 @ 7:34PM
Conor said...
As a Starbucks manager that worked my way up from barista, I find the suggestion that shift supervisors "occasionally serve a cup of coffee" laughable. 95% of a shift's day is spent at the register or making drinks. The only difference is making sure that people get brakes and counting money. This idea that there is a fundamental difference between baristas and shifts clearly stems from someone who's never done either. Ask any of my employees, baristas or shifts and they'll tell you the same thing.
3-22-2008 @ 8:15PM
smkd trky chitlins said...
shift supervisors are the corporate and managerial branch.they are not entitled to coffee grinds.they get get well paid to crack the whip on those poor, hard working baristas. not one thin dime!!
3-23-2008 @ 2:25PM
Heather said...
Starbucks Loses lawsuit as it should have?! I don't think so.....
I am a Barista at starbucks in Seal Beach, CA. Shift Supervisors are on the floor with us at all times, working their tail off as Barista's do. Their only main difference is taking care of money when needed, and they help keep everyone on task. CA labor laws state that anyone who does customer interaction deserves tips, and shift supervisors do that on their whole shift, there is no "backroom" work like managers. They do not work off of salary, and they only get paid around $1.50 more than the average barista, so tips are imperative for them to live. I don't know what kind of Starbucks Jou Chou worked at where the shift supervisors are always in the back, but let me tell you-that's not how it is and you can walk into any starbucks and witness that.
I hope appealing this case works out in Starbuck's favor. Starbucks is an amazing company who makes sure to take care of each partner-from college reimburstment, health care, 401k plans. The fact that Starbucks now has to take tips away from well deserving employees does not shine a light on a company that has worked to hard to be the best out there. I am shocked that even our own customers believe this lawsuit is fair, when they interact with our shift supervisors all the time.
I appreciate the support you all have with us Barista's and acknowledge that we work hard, but just take note at who we work alongside. They don't look any different than we do, because they ARE one of us.
3-23-2008 @ 9:42PM
m said...
starbucks managers make 70 grand a year according to a star manager, and dont make 1.50 more an hour than there employees if they did it would be the 1st time this decade that i e ver met somebody that says my manager makes 1.50 more an hour than me
3-25-2008 @ 1:39AM
Jennifer said...
This is to "m" and "smkd trky chitlins":
I don't know where you got your "info"/opinion, but it could NOT be more misguided. We (shift supervisors) are NOT managers, and we certainly do not make 70 g's a year. Get real!! We supervisors work just as hard as the baristas, and we are only compensated one or two dollars more an hour for the added responsibilities. It makes me ill to think that people believe we are taking money away from baristas, or that we do not work on the floor at all. I love my job and I do not work for the tips, but the principle of this matter and the ignorance of some people are what incite me to respond. Think of it this way, in stores that only average 1.50 an hour in tips, if you took that away from the shifts, wouldn't the baristas then make the same amount for less responsibility? Think about that and consider the "fairness" of this ruling. Starbucks is an awesome company and they work very hard to ensure that all partners--that's what we're all called--are taken care of. Shame on the court system for not seeing reason and common sense in this issue and penalizing a company like Starbucks.
3-28-2008 @ 1:03AM
Shift_Super said...
I would also like to add a comment and confirm what some have been arguing...I am a California shift supervisor at Sbux and I'm really sad that people do not understand how much work we put in during our shifts. There is a definite line between SMs, ASMs, and shift supervisors. People also over estimate our title because we only have a few more responsibilities than baristas do and only get paid a few more cents than them. We make drinks, we conversate with customers, we make prep and measure out coffee, we use the registers, we clean (even the restrooms and floors) and wash dishes, we do all of that and more. The tips that we get and the hours that we work are not even always guaranteed. Maybe Jou Chou just started working for Sbux because it seems that he doesn’t know what shift supervisors are all about.
On another note, I can understand this comment "tips essentially subsidize the pay of supervisors/managers, and this is a beneficial thing for Starbucks" because of the fact that tips are not always guaranteed. I can get as much as approximately $10-$40, depending on how well we do in tips and how much that we work for that week. So here's my question: Since we are shift supervisors, does distributing tips to us allow Sbux to get out of paying us according to our title?
3-29-2008 @ 10:34AM
Emily said...
I am also a shift supervisor for Starbucks and echo everything posted by other shift supervisors. I also think that if they polled the baristas that work for Starbucks, most of them (I would have said all of them before this lawsuit) would agree that we deserve tips just as much as they do. I also want to add that it makes me really sad that people would bring a lawsuit against a company like Starbucks. Starbucks is an amazing company to work for, and they are AMERICAN owned. During hard economic times like this, do we really want to be trying to bring down and American company that employs so many people? Not a smart move!
3-28-2008 @ 10:03PM
Me said...
Many of you have already done a great job of defending the policy, but I am chiming in on every search result I get on Jou Chou, and hopefully I eventually find her email. What's ridiculous about the whole thing is that the definition of management is described as the discretion to hire, fire, discipline, recommend compensation, etc... I have been both a manager and supervisor and I know that supervisors do not have those abilities. Howard is totally right in saying that this is beyond all common sense and reason. In my experience, the shift supervisors generate most of the tips in stores.
4-02-2008 @ 1:52PM
Mike said...
I also am a barista. Shift supervisors are not managerial, per se. They are also part timers and are not on a "fixed" salary like assistant managers and managers. They work as hard as baristas with extra responsibilities. If it becomes illegal for them to get tips to augment their salaries, which is not a major increase from barista pay, then sbux should pay them more to counter what they will lose. One disgruntled employee gets most the air time.
4-05-2008 @ 6:43AM
Elwood said...
The Position should be reclassified to cashier,what's big deal
4-11-2008 @ 7:28PM
New_Shift said...
As a new shift supervisor, i'm well aware of the difference in pay between Baristas and Supervisors.
Prior to my promotion I was earning 7.85/hr + 2.35/hr average tips. Thats 10.20/hr before tips. after 19 months with the company.
Once I was promoted My wages were increased to 8.12/hr. without tips were talking about two dollars/hr for less responsibility, less accountability, less skill, and less work.
It's easy to say that Starbucks would benefit from not having to pay supervisors more to compensate.
But when you consider that all employees who works for 20 hours a week are provided with Health Insurance, paid vacation, and free stock/stock options..ect..
Well, suddenly, it seems more beneficial to the baristas to ensure the company stays profitable. Because if its so unreasonable to share your tips with those who work alongside you, then neither is it unreasonable for the benefits to go to those who have proven that they want to contribute more, and work harder to do so.
If you're a barista who thinks that sharing tips with your SS's is unfair, think about your benefits, and how much money the company would save if YOU didn't get them until you were promoted.
Does that sound fair?