Starbucks Brews Trouble over Tip Jar

March 25, 2008 09:48 AM
by findingDulcinea Staff
A judge ordered Starbucks Corp. to pay $86.7 million plus interest to thousands of California baristas for forcing them to share tips with shift supervisors.

30-Second Summary

The judge in the case ruled that Starbucks' tip pool policy violated California’s labor code, because “agents” of the company, or the shift supervisors, were sharing tips with baristas.

The money from the jars was apportioned to employees based on the number of hours worked. The average tip received was $1.71 an hour. While the decision is the latest setback to efforts by newly reinstated CEO Howard Schultz to revive the company’s ailing stock, some question the practice of tipping in coffeehouses at all.

Eric Felten of The Wall Street Journal tells the java giant to “lose the tip jar,” bemoaning the ubiquity of coffeehouse gratuity and Starbucks’ role in its propagation. Felten writes that the tip jar encourages staff animosity, makes customers feel uncomfortable and subsidizes the company’s payroll costs.

“When you toss a dollar into the cup, you’re really making a donation to Starbucks—and I can think of needier beneficiaries,” Felten says.

A press statement released by the company indicates that the coffee behemoth will appeal the ruling.

“The decision today, in our view, represents an extreme example of an abuse of the class action procedures in California’s courts,” the statement reads.

Headline Links: Starbucks ordered to refund tips to baristas

Background: Recent Starbucks news

Reactions: Starbucks Corp. and employees respond

Related Topic: The point of tipping

Reference: Guide to tipping


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