Starbucks Wins Reversal of $100 Million Tip Pooling Case

By July 1, 2009Articles

Tip Pooling is the wide spread practice of employees sharing tips left by patrons. Labor Code Section 351 prohibits business owners, managers and supervisors from sharing in any portion of the pooled tips. The general rule is that tips are the sole property of the employee(s) to whom it was paid or left for.

Last month, in Chau v. Starbucks, the California Court of Appeals in San Diego reversed a trial court award requiring the coffee giant to pay more than $100 million in restitution to its workers for allowing shift supervisors to share baristas’ tips. The appellate court ruled that the supervisors, which essentially perform the same job functions as baristas 95% of the time, may share in tips left behind in collective tip jars. Because Starbuck’s shift supervisors do not have the managerial power to hire, fire or promote, and spend the vast majority of their time servicing customers, the court ruled that Labor Code Section 351 does not prohibit Starbucks from allowing supervisors to share in tips left for baristas.

The class action attorneys representing the plaintiffs promised to appeal the decision to the California Supreme Court.

For any questions or comments regarding this Labor Law Update please contact attorney Michael Daly of the Daly Law Firm at (619) 525-7000 or

Leave a Reply