Alaska Employment Law

Howard Schultz, Chairman and Chief Executive of Starbucks, has sent thousands of employees a voice mail message complaining about the court decision to require Starbucks to pay its baristas approximately $87 million plus interest for breaking the law by splitting their tips with shift supervisors. He contends that management “would never condone any type of behavior that would lead anyone to conclude that we would take money from our people.”

In a separate statement, Schultz claimed there was no money to be refunded or returned from Starbucks, although there is a hearing set for May 1 before deciding Judge Cowett, as to how to distribute the tips. Further, a spokeswoman said the company had no intention of ending its tip sharing practice while seeking an injunction. An attorney for the baristas, Daniel Long, characterized Starbucks as being defiant and portraying an attitude that “they are just above the law.”

The court ruled that the shift supervisors were “agents” of the company pursuant to California law. Suits have been planned in Massachusetts and Minnesota, with threats in other states, including Washington; in Washington, the Department of Labor also is investigating the minimum wage issue to make sure the company does not offset the minimum wage in its tip sharing practice. In California and the states where suit has been filed or is planned, the statute specifically prohibits supervisory employees who direct other employees from taking part in tip pools. (Alaska law ties its definition of tip sharing to FLSA definitions. See this blog for Alaska law, March 26, 2008.)

Starbucks calls these suits unjust and “copycats,” which it claims it will fight vigorously. The company now contends, apparently contrary to court testimony, that the shift supervisors are hourly employees with no authority, and the customers perceive no difference between them and baristas. To deprive the shift supervisors of tips is “fundamentally unfair and beyond all common sense and reason.”

H/T Lawyers USA.