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Barenboim v. Starbucks Corp.

Court of Appeals of New York

June 26, 2013

Jeana BARENBOIM et al., Appellants,
v.
STARBUCKS CORPORATION, Respondent. Eugene Winans et al., Appellants, et al., Plaintiff,
v.
Starbucks Corporation, Respondent.

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[972 N.Y.S.2d 192] Lichten & Liss-Riordan, P.C., Boston, Massachusetts (Shannon Liss-Riordan of counsel), and Joseph, Herzfeld, Hester & Kirschenbaum LLP, New York City (Daniel Maimon Kirschenbaum of counsel), for appellants in the first above-entitled action.

Outten & Golden LLP, New York City (Adam T. Klein, Lewis M. Steel and Molly A. Brooks of counsel), and Outten & Golden LLP, Chicago, Illinois (Paul W. Mollica of counsel), for appellants in the second above-entitled action.

Akin Gump Strauss Hauer & Feld LLP, Los Angeles, California (Rex S. Heinke, Gregory W. Knopp, Katharine J. Galston and L. Rachel Lerman, of the California bar, admitted pro hac vice, of counsel), Akin Gump Strauss Hauer & Feld LLP, New York City (Samidh Guha of counsel), and Akin Gump Strauss Hauer & Feld LLP, Washington, D.C. (Daniel L. Nash and Nathan J. Oleson, of the District of Columbia bar, admitted pro hac vice, of counsel), for respondent in the first and second above-entitled actions.

Eric T. Schneiderman, Attorney General, New York City (Steven C. Wu, Barbara D. Underwood and Julie M. Sheridan of counsel), for New York State Department of Labor, amicus curiae in the first and second above-entitled actions.

Jackson Lewis LLP, New York City (Jeffrey W. Brecher, Felice B. Ekelmdn, Noel P. Tripp and Tara Touloumis of counsel), for New York State Restaurant Association, Inc., amicus curiae in the first and second above-entitled actions.

[972 N.Y.S.2d 193] Gladstein, Reif & Meginniss LLP, New York City (James Reif of counsel), and Harrison, Harrison & Associates, Ltd. (David Harrison of counsel) for UNITE HERE! Local 100 and others, amici curiae in the first and second above-entitled actions.

Fox Rothschild LLP, New York City (Carolyn D. Richmond, Eli Z. Freedberg and Rosemary P. Joyce of counsel), for New York City Hospitality Alliance, amicus curiae in the first and second above-entitled actions.

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OPINION

GRAFFEO, J.

[995 N.E.2d 155] The United States Court of Appeals for the Second Circuit has posed two questions regarding the legality of Starbucks Corporation's tip-splitting policy under Labor Law § 196-d.

I.

Defendant Starbucks Corporation is a Washington-based coffeehouse company that operates hundreds of outlets in New York State. In each store, Starbucks employs four categories of employees: baristas, shift supervisors, assistant store managers and store managers. Baristas are the front-line, entry-level employees responsible for tasks such as taking orders, making and serving the company's coffee, tea and food offerings, operating the cash register, cleaning tables and stocking product. They work on a part-time, hourly basis.

After six months' employment, baristas may become eligible for promotion to shift supervisors. Like baristas, shift supervisors are primarily responsible for serving food and beverages to customers. In fact, they spend nearly all their time performing the same customer-related duties undertaken by baristas. They also work on a part-time basis and are paid an hourly wage. As their title suggests, however, shift supervisors have some supervisory responsibilities, such as assigning baristas to particular positions during their shifts, directing the flow of customers and providing baristas with feedback about their performance. Shift supervisors may also open and close stores, change the cash register tills and, if neither an assistant store manager nor store manager is present, make bank deposits.

Assistant store managers represent the third rung in the Starbucks hierarchy. Although assistant store managers devote the majority of their time performing customer-oriented services, they also possess greater managerial and supervisory authority than shift supervisors. For example, they assist store managers in interviewing applicants, assigning work shifts to baristas and shift supervisors, and evaluating employee performance. They also participate in decisions to hire or fire employees, recommend corrective action for employee infractions and process

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payroll. In essence, an assistant store manager functions as the store manager's deputy. In contrast to baristas and shift supervisors, assistant store managers are full-time employees who receive a salary if they work at least 37 hours per week. And unlike baristas and shift supervisors, they are eligible for quarterly bonuses and certain benefits, including holiday and sick pay.

Finally, store managers constitute the highest rank in the workforce structure. With the support of assistant store managers, store managers are responsible for the overall operation of the store. They have the power to hire, promote, transfer, schedule, discipline and terminate baristas and shift supervisors. Store managers, like assistant store managers, are full- [995 N.E.2d 156] [972 N.Y.S.2d 194] time, salaried employees who are eligible for various benefits.

Starbucks maintains a written policy governing the collection, storage and distribution of customer tips. Pursuant to this policy, each Starbucks store places a plexiglass container at the counter where patrons may deposit tips. Once these tip canisters become full, Starbucks requires, that they be emptied into a bag and the money is stored in a safe. At the end of each week, the tips are tallied and distributed in cash to two categories of employees— baristas and shift supervisors— in proportion to the number of hours each employee worked. Starbucks does not permit its assistant store managers or store managers to share in the weekly distribution of tips. The company's decision to ...


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