Thumbnail image for tip_jar2.jpgCo-authored by Ariel Cudkowicz and Jessica Schauer

On Friday, March 18, 2011, the U.S. District Court for the District of Massachusetts adopted a pair of reports by a federal Magistrate finding that Starbucks violated Massachusetts law by allowing “shift supervisors” to share in the proceeds of tip jars and recommending certification of a class of Massachusetts baristas affected by the practice.

The plaintiffs in Matamoros v. Starbucks Corp., No. 08-cv-10772 (D. Mass.) alleged that the coffee shop chain violated the Massachusetts Tips Law, Mass. Gen. Laws ch. 149 § 152A, by allowing shift supervisors to receive a share of tips deposited by customers in tip jars located at the store’s cash registers.  Under the Tips Law, only wait staff and other employees who have “no managerial responsibility” are permitted to share in tip pools.  In early February, Magistrate Judge Leo Sorokin determined that although Starbucks shift supervisors spend a majority of their time serving customers, they possess managerial responsibility for purposes of the statute because they also perform duties such as directing employees to workstations, opening and closing the store, opening the store’s safe, and handling and accounting for cash. 

The Magistrate also rejected Starbucks’ argument that cash deposited in the tip jars is not a “tip” for purposes of the Tips Law because it is intended to reward service performed by the shift supervisors, and thus is not “given as an acknowledgment of service performed” by non-managerial employees, as required by the statute.  The Magistrate determined that money placed in the jar is meant to reward service by the entire Starbucks team, including non-managerial employees, and therefore meets the statutory definition. 

In a separate report issued the same day, the Magistrate also recommended that the District Court certify a class of current and former Massachusetts baristas, finding that no conflict existed between baristas who had been promoted to shift supervisor positions and the rest of the class.

Under federal procedural rules, the Magistrate’s decision did not become final until last Friday, when it was adopted by the District Court.  In adopting the Magistrate’s decision in its entirety, District Court Judge Nathaniel Gorton called it “thorough and well-reasoned.”  The decision is one of only a handful of decisions construing the unusually restrictive Tips Law. 

While not surprising, the District Court’s adoption of the Magistrate’s recommendations is disappointing.  Like previous Tip Law cases, the Magistrate’s decision attempts to take into account customer expectations, but it fails to appreciate that quasi-supervisory employees like Starbucks’ shift supervisors often are indistinguishable from line employees from the customer’s perspective.  Many Starbucks customers likely would be surprised to learn that, due to a restrictive interpretation of a technical state law provision, the individual who took their order or made their latte will never see any part of the dollar(s) they dropped into the tip jar.