Alaska Employment Law

A California Superior Court ordered Starbucks to pay all California baristas more than $100 million in back tips and interest that the coffee chain paid to shift supervisors.  This was a class action with as many as 100,000 baristas in all Starbucks California stores. The Court held that state law prohibited managers and supervisors from sharing employee gratuities.  Starbucks intends to appeal. (The amount of the judgment is approximately one-half the company’s profits in the most recent quarter.)

This is the second unfavorable legal ruling against Starbucks this month.  In a federal case in Houston, the company recently agreed to pay an undisclosed sum to about 350 assistant managers forced to work off the clock.

The decision, Chou v. Starbucks, appears here.

Within a week, Starbucks was sued again in Massachusetts on the same theory. The attorney for the plaintiffs there indicated the company could be sued in Washington, New York, and Minnesota as well.

Under Alaska law, 8 AAC 15.907, employers may not take possession or control of employee tips, except to deliver cash to the employee for a credit card charge or to redistribute tips pursuant to a tip pooling arrangement, by which a portion of an employee’s tip is collected for distribution among certain other employees. The regulation adopts the FLSA on tip pooling, which does not prohibit pooling of tips by employees who customarily receive them. 29 U.S.C. § 203(m). A “tipped employee” means any employee engaged in an occupation in which the employee customarily and regularly receives more than $30 a month in tips.  Id., § 203(t).