LEGAL NEWSLINE

NEW YORK (Legal Newsline) - A three-judge panel of the U.S. Court of Appeals for the Second Circuit decided more clarification was needed from the New York Court of Appeals before they could decide on a pair of Starbucks tip-sharing cases.

Both cases involve New York Labor Law § 196-d, which states, in relevant part: No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee... Nothing in this subdivision shall be construed as affecting the... sharing of tips by a waiter with a busboy or similar employee.

Starbucks employs four types of workers in each store. The "baristas" are responsible for taking customers' orders and serving the food and drink items. Next up the chain are the "shirt supervisors" who primarily share the work of the baristas but have limited supervisory responsibilities.

"Assistant store managers," although having limited serving responsibilities, are salaried and act as the "deputies to the highest-ranking employees, the store managers."

Tips are collected in a box on the counter at each Starbucks store. The tips are pooled and distributed weekly, according to hours worked, to the baristas and the shift supervisors. It is company policy that the assistant managers and the store managers not receive a share of the tip pool.

In the first case, a group of baristas sued Starbucks, contending that shift supervisors are agents of the company and should not receive tips under the 196-d. In the second case, a group of assistant store managers claimed that, regardless of their titles, they deserved a share of the tip pool under 196-d, because they "received" tips when they served customers.

Summary judgment in favor of Starbucks was found in both cases in the United States District Court for the Southern District of New York.

The Second Circuit's analysis of the cases found guidance in other New York Labor Laws, as well as in the recently enacted New York State Hospitality Wage Order. However, it ultimately decided that they needed further guidance from the New York Court of Appeals, primarily on:

-What factors determine whether an employee is an "agent";

-Whether employees with managerial or supervisory authority are precluded from receiving shares of tips even when they render services which generate tips; and

-If New York Labor law permit an employer from excluding to exclude tip sharing from an employee who would be eligible under New York law.

On certification to the state Court of Appeals, the Second District ruled, "This panel retains jurisdiction and will consider any issues that may remain on appeal once the New York Court of Appeals has either provided us with its guidance or declined certification."