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Up to 100,000 current and former Starbucks baristas — the people who make the low-fat-decaf-double-shot-venti lattes — have been awarded about $1,000 (£500) each in unpaid tips after a court ruled that supervisors should not have shared the gratuities.
The award, made by a judge at San Diego Superior Court, brings uncomfortable scrutiny to the low wages of America’s service employees, as well as its tipping culture, which often baffles visiting Britons.
It also comes at a time when Starbucks — the world’s largest coffee house chain that was once revered for its progressive ideas and financial savvy — is closing stores and reshuffling its management amid intense competition from lower-price rivals such as McDonald’s. In the past 16 months the company’s once unstoppable stock price has more than halved in value.
The first sign of trouble over the Starbucks tip-sharing policy came in 2004 when Jou Chou, a barista in the smart beach town of La Jolla, filed a lawsuit against the company for allowing his supervisors to take a cut of his gratuities. Two years later the lawsuit was granted “class action” status — meaning that Mr Chou could claim compensation on behalf of others, with any proceeds distributed after the conclusion of the trial.
According to blog postings by Starbucks employees, baristas make about $7 (£3.50) an hour, with supervisors — who are below assistant managers — earning an extra $1.50.
Mr Chou claimed that it was illegal in California for management to share employees’ gratuities and as his case progressed, it emerged that Starbucks supervisors typically claim about $1.71 an hour from the tip pool.
By multiplying $1.71 by the number of hours worked by supervisors at Starbucks between 2000 and 2008, the court arrived at the award of $86.6 million in back tips, plus an estimated $19.1 million in interest. Only current and former Starbucks employees in California will be able to claim their share of the compensation.
“I feel vindicated,” Mr Chou said yesterday. “Tips really help those receiving the lowest wages. I think Starbucks should pay shift supervisors higher wages instead of taking money from the tip pool.”
Patricia Cowett, the judge in the case, not only ruled in favour of Mr Chou but also issued an injunction ordering Starbucks to change its tip-sharing policy immediately.
Starbucks reacted furiously. Valerie O’Neil, a spokeswoman, described the award as fundamentally unfair and beyond all common sense and reason. It was “an extreme example of an abuse of the class-action procedures in California’s courts”.
Ms O’Neil also criticised the brevity of the judge’s ruling — it was only four paragraphs long — and said that the company would appeal.
A statement published later on the company’s website said: “Starbucks believes that our shift supervisors deserve their fair share of the tips that they receive from the tip jars in our California stores. We are disappointed with the decision by California Superior Court to take away that right and order that shift supervisors be prohibited from receiving tips. We also disagree with the court’s ruling to award damages under which the baristas will receive the tips that shift supervisors have earned in the past. We are particularly disappointed that the court’s decision, which is a mere four paragraphs issued after a lengthy trial, did not even address the obvious unfairness to our shift supervisors in denying them tips.”
Not all customers tip when they buy coffee, but some leave their change in the jar by the register, and others add $1 to their credit card receipt — the latter being a relatively new phenomenon that can make customers feel guilty if they leave the line marked “gratuity” blank (although for lower-priced card purchases, no signature is necessary).
Tipping in table-service restaurants is less controversial. Most Americans are happy to pay anything from 10 per cent to 20 per cent for service that is often far quicker and friendlier than in Britain. In some restaurants, a range of suggested percentage-based tips are printed on the bill.
Nevertheless, there are some Americans, like many visiting Britons, who always find a reason not to tip.
At Starbucks, the low wages and relatively meagre tips can affect morale, even with shift supervisors.
“I’ve been a shift supervisor for about seven months,” one posting on ihatestarbucks.com begins. “I’m at $8.24 per hour now. I get about 30 hours [of work] a week. I hate the first person who walks in the door [at 5am], usually they are waiting outside the door when I open it and I have to make myself smile.”
But it is the current and former baristas who spill the most vitriol online. At StarbucksUnion.com, a former employee wrote recently: “Many customers were rude and would annoyingly watch you make the drinks and ask if their drink was ready yet. Many of the duties also performed were janitorial, ie, mop the floor, clean the bathroom. At my store, all the manager ever did to show appreciation for the workers was to say, ‘You ROCK!’”
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