Barenboim v. Starbucks, 21 N.Y.3d 460 (2013)
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Under New York Labor Law § 196-d, an employee’s eligibility to participate in an employer-mandated tip pool depends on whether their personal service to patrons is a regular part of their duties and the extent of their authority over subordinates, not solely on their job title.
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Summary
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This case addresses the legality of Starbucks’ tip-splitting policy under New York Labor Law § 196-d, specifically regarding the inclusion of shift supervisors and the exclusion of assistant store managers from tip pools. The New York Court of Appeals held that tip pool eligibility hinges on whether an employee regularly provides direct service to patrons and the extent of their supervisory authority. Employees with significant authority over subordinates are ineligible, while those with limited supervisory roles but regular customer service duties remain eligible. The court also affirmed that employers can exclude otherwise eligible employees from tip pools, subject to certain limitations.
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Facts
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Starbucks operates with four employee categories: baristas, shift supervisors, assistant store managers, and store managers. Baristas perform entry-level tasks like taking orders and serving customers. Shift supervisors perform similar customer service duties as baristas but also have limited supervisory responsibilities, such as assigning tasks to baristas. Assistant store managers spend most of their time on customer service but also assist store managers with tasks like interviewing and evaluating employees. Store managers oversee the entire store operation, including hiring and firing. Starbucks’ policy allows baristas and shift supervisors to share tips but excludes assistant store managers and store managers.
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Procedural History
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Former baristas (Barenboim) sued, claiming shift supervisors were ineligible for tips under Labor Law § 196-d. The District Court granted summary judgment to Starbucks. Separately, former assistant store managers (Winans) sued, arguing they were eligible for tips. The District Court found a triable issue but granted Starbucks summary judgment, holding that the law doesn’t compel inclusion in tip pools. Both cases were appealed to the Second Circuit, which certified questions to the New York Court of Appeals.
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Issue(s)
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1. What factors determine whether an employee is eligible to receive distributions from an employer-mandated tip-splitting arrangement under New York Labor Law § 196-d?r
2. Does New York Labor Law permit an employer to exclude an otherwise eligible tip-earning employee under § 196-d from receiving distributions from an employer-mandated tip pool?
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Holding
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1. An employee is eligible to participate in a tip pool if their personal service to patrons is a principal or regular part of their duties, even with limited supervisory responsibilities. However, an employee with meaningful authority or control over subordinates is not eligible; because, they are not considered similar to waiters and busboys.r
2. Yes, New York Labor Law permits an employer to exclude an otherwise eligible employee from receiving distributions from a tip pool; because, § 196-d defines who is eligible or ineligible but doesn’t grant an affirmative right to participate, although there may be limits to this ability.
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Court’s Reasoning
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The Court of Appeals deferred to the New York State Department of Labor’s (DOL) interpretation of Labor Law § 196-d, particularly the phrase