Starbucks Must Pay Back Tips Worth $105 Million
By Charlie Brett
20:10, March 21st 2008
22 votes
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Starbucks Must Pay Back Tips Worth $105 Million

Starbucks, the largest coffeehouse company in the world, must pay $105 Million to current and former baristas, a San Diego court ruled on Thursday. The coffee shop chain must pay the penalties because its supervisors in California were paid with money taken from the servers' tip pool.

The class action could involve approximately 100,000 coffee servers according to The Los Angeles Times. The amount a current or former server may recover from Starbucks could rise to as much as $10,000.

However, Seattle-based Starbucks Corp. said on its Web site it would appeal the court’s decision. The company officials labeled the decision as “an extreme example of an abuse of the class-action procedures in California courts."

The Californian law doesn’t allow employers to take employees' tips. Starbucks apparently broke the state law and the suit was filed in 2004 on behalf of 100,000 Starbucks baristas in about 1,400 California stores.

``This whole case was about restitution. It was about requiring Starbucks to repay the baristas for the money it had taken from the tip pool to pay the shift supervisors,'' said David Lowe, a lawyer representing Starbucks servers.

Judge Patricia Y. Cowett of the San Diego Superior Court blocked the company from sharing the tips arguing that Starbucks continues to split the tips from the tip pool to compensate shift supervisors as well as baristas.

According to court documents, the coffee shop chain improperly distributed as much as $87 million to its supervisors. Adding 7 percent in annual interest, the court ruled that Starbucks must return $105 million to its baristas.



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