Is Tip Pooling or Tip Sharing Legal?
Tip pools and tip sharing are significant topics for employees in both the food service and hospitality industry. The Second Circuit’s Court of Appeals will soon clarify the the prohibition against participation by an employer’s “agents” in tip pools and sharing arrangements.
The court’s certification order arose out of two class actions against Starbucks involving their “baristas.” In Barenboim v. Starbucks Corp., employees objected to shift supervisors obtaining a portion of their tips because they assigned baristas to positions during their shifts, administered break periods, directed the flow of customers, and provided feedback on baristas’ performance. As such, they argued, the shift supervisors were “agents” of the Starbucks and ineligible to participate in tip pooling the applicable labor laws.
The second case, Winans v. Starbucks Corp., presented nearly the reverse issue: assistant store managers claimed that they are not agents of the employer and thus are entitled to participate in the stores’ tip pools.
The DIstrict Court certified the following questions to the New York Court of Appeals:
- “What factors determine whether an employee is an ‘agent’ of his employer for purposes of N.Y. Lab. Law § 196-d and, thus, ineligible to receive distributions from an employer-mandated tip pool?,” and
- “Does [the 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?”
While this may be an issue pending before the Second Circuit, employees in Santa Barbara, San Luis Obispo and Ventura who have tip pooling questions are encouraged to contact Adams Law for answers.