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Starbucks to pay $100M+ in back tips

March 20, 2008 6:32:15 PM PDT
Superior Court judge on Thursday ordered Starbucks to pay its California baristas more than $100 million in back tips that the coffee chain paid to shift supervisors. Saying baristas were entitled to $86 million in back tips plus interest, San Diego Superior Court Judge Patricia Cowett also issued an injunction preventing Starbucks' shift supervisors from sharing in future tips.

Cowett said the practice was a violation of a state law prohibiting managers and supervisors from sharing in employee tips.

Starbucks Corp. spokeswoman Valerie O'Neil said the company planned an immediate appeal, calling the ruling "fundamentally unfair and beyond all common sense and reason."

The lawsuit was filed in October 2004 by Jou Chou, a former Starbucks barista in La Jolla, who complained shift supervisors were sharing in employee tips.

The lawsuit gained ground in 2006 when it was granted class action status, allowing for the suit to go forward for as many as 100,000 former and current baristas in Starbucks's California stores.

"I feel vindicated," Chou said in a written statement released by attorneys. "Tips really help those receiving the lowest wages. I think Starbucks should pay shift supervisors higher wages instead of taking money from the tip pool."

California is Starbucks' largest U.S. market, with 2,460 stores as of Jan. 8, the latest count available. The company has more than 11,000 stores nationwide.

Starbucks earned more than $672 million on revenue of $9.4 billion during its fiscal 2007, which ended Sept. 30.

The coffee company also took issue with the brevity of Cowett's ruling, which was only four paragraphs, saying the judge failed to address the unfairness to shift supervisors.

"This case was filed by a single former barista and, despite Starbucks request, the interests of the shift supervisors were not represented in litigation," O'Neil said.

Terry Chapko, an attorney for the baristas, said the ruling was a victory, but the case was far from over.

"Starbucks should be paying their shift supervisors a supervisory wage, not compensating them through tips that legally belong to baristas," he said.

 

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