$106 million ‘tip-pooling’ verdict is overturned

Starbucks’ policy of allowing shift supervisors to share in a “tip pool” is legal, says a California appeals court in overturning a $106 million verdict against the coffee-shop giant. The case was a class action brought by a group of “baristas” who claimed that the shift supervisors were management employees and thus ineligible to share in tips.

 But the court said that the customer tips in this case were intended to reward the entire team of service employees, including the supervisors, so allowing the supervisors to share in the “pool” was okay. This case has received widespread attention, and made many people aware of the highly complex rules that can govern which employees are allowed to participate in tip pools. The California decision only applies to that state and to the particular arrangement at Starbucks; the result elsewhere might be different.

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