In the state of California it is illegal for supervisors to share in employee tips. Starbucks recently lost a lawsuit brought by an employee who said he was forced to share a portion of his tips with his supervisor. The judgment awarded over $100 million in back tips and interest to the Starbucks baristas of California, and now several similar lawsuits are pending in other states.
Starbucks CEO, Howard Schultz, however, is more concerned about how the media is portraying Starbucks than he is about paying the back tips. Why? According to a spokesperson, Starbucks won’t be changing their practice and they won’t be paying up.
Chairman and Chief Executive Howard Schultz, in a voice-mail message to employees Wednesday night, called last week’s ruling by a California judge “extremely unfair and beyond reason” and said he wanted employees to know the truth.
“I want to personally let you know that we would never condone any type of behavior that would lead anyone to conclude that we would take money from our people,” he said.
In a separate statement, the company also said, “Contrary to some reports, Starbucks has not taken money from any of its partners, and nor is there money to be refunded or returned from Starbucks.” A spokeswoman said Thursday that Starbucks Corp. has no intention of ending the practice of sharing tips among baristas and shift supervisors in California while it seeks an injunction.
San Diego Superior Court Judge Patricia Cowett, in her ruling last week, said there was “uncontroverted testimony that Starbucks continues to utilize the distribution of tips from the tip pool to compensate shift supervisors as well as baristas.” Cowett ordered Starbucks to pay thousands of California baristas $86.7 million plus interest for breaking the law.
Cowett ruled that Starbucks had illegally forced baristas to share tips with shift supervisors, and the judgment could rise to nearly $106 million. The judge found Starbucks violated California law because “agents” of the company, or, in this case, shift supervisors, were sharing tips with baristas. Similar lawsuits were filed this week in Massachusetts and Minnesota, with threats of more suits in other states, including Washington.
Schultz also said that his company was being “grossly mischaracterized” in the media.