Tips ruling against Starbucks sends a jolt to other eateries

Times Staff Writers

The restaurant industry got a bad case of coffee jitters Friday after a San Diego judge slapped Starbucks Corp. with a more than $100-million judgment for unlawfully giving supervisors a cut of barista tips.

The California Restaurant Assn. wouldn’t comment on how the decision announced Thursday by Superior Court Judge Patricia Cowett might affect other eateries.

And consultants didn’t want to get on the wrong side of the coffee giant.


“I am working in an industry where you would not want to be attached to anything extremely negative about Starbucks,” said Darren Tristano, executive vice president of Technomic Inc., a Chicago-based food industry consulting company.

But the issue isn’t about to go away. Starbucks is planning to appeal the ruling, which bans shift supervisors from sharing in tip jar money even if they make drinks and serve customers alongside lower-ranked baristas. The penalty plus interest would be paid to baristas who worked at California stores since October 2000.

And it’s clear that some non-Starbucks chains are facing the same situation.

Pooling tips is a common practice, and California and several other states require managers to keep their hands out of the tip jar.

But restaurant owners can get tripped up when they designate some hourly employees as supervisors. Thursday’s ruling could cause Starbucks and other eateries to change how they do business, perhaps altering their pay systems or the way they differentiate management from workers.

“We allow all of the people who work behind the counter to share the tips,” said the owner of a local cafe with counter service. He didn’t want his name printed for fear of falling on the wrong side of the tip debate.

“Eighty percent of the people who work behind the counters are supervisors, so it would be unfair if we allowed the crew people to take all the tips. They would be making more money than the supervisors.”

Dan Kim, North American president and chief executive of the Red Mango frozen yogurt chain that has 18 U.S. shops, said he knew about the pending Starbucks case when he opened the first of the stores last year.

“We were actually going to not do tips at all because of that,” Kim said. “But tips are pretty important -- that extra dollar per customer really does help.”

The stores have three levels of employees, all paid by the hour.

Only employees on the lowest end of the pay scale can receive a share of the tip jar. Managers and supervisors who work the counters miss out but can get bonuses based on a store’s quarterly performance.

The Starbucks case was not the first to take up this matter. Labor attorney Sheryl Willert represented a restaurant in Washington state -- which has a tipping law similar to California’s -- that was sued by its workers over the sharing issue. Willert lost the case, which was decided about a decade ago with little fanfare.

“But this is Starbucks,” she said. “It’s going to be a wake-up call.”

Few on either side of the counter at Starbucks seemed happy with the court’s ruling.

On Friday morning, shift supervisor Robert Velasquez was the only employee making drinks at a crowded shop at La Brea Avenue and San Vicente Boulevard in Los Angeles. Under the decision, he will now go tipless.

“When there are no baristas here, supervisors are the ones who make the drinks,” Velasquez said. “And we should be able to get tips.”

Velasquez, 18, says he earns about $2.50 an hour from tips, which he uses for gas money. He stands to lose as much as $100 a week as a result of the ruling.

A nonmanagement drink maker at a Starbucks in Larchmont Village was sympathetic, echoing several others who said they wouldn’t feel right about not sharing tips with shift supervisors.

“It’s only going to help me,” said the barista, who asked that his name not be published. “Even though I’ll take the money, they’re hurting all the wrong people,” the Starbucks employee said.

Patrons, meanwhile, were confused about who is and who isn’t a manager.

“I thought the person who was making my drink was getting my tips,” said Jason Zimmerman, 32, an actor who was at a Starbucks in West Hollywood having an iced coffee with two shots of espresso and two pumps of sugar-free vanilla.

“They deserve that money; it belongs to them,” Zimmerman said. “I don’t tip for the supervisors.”

David Reifsnyder, 50, a video technician spending time at another Starbucks in Los Angeles, said he had no problem with supervisors getting a cut of the tips.

“I know a lot of bartenders that share their tips with their managers, so I understand the philosophy behind it,” Reifsnyder said. “They all work together to create a work environment that’s tipable.”

Dwayne Perkins, 37, a stand-up comedian who was at the Starbucks on La Brea, took a cosmic view.

“When you give, you can’t really ask where it’s going,” said Perkins, who had finished a chai tea. “Plus, it would hold up the line.”