Under New York law, a customarily tipped employee cannot be forced to share tips with an employer or its “agent”. In 2009, a New York federal judge ruled that Starbucks did not violate the New York Labor law (specifically Section 196-d) by permitting shift supervisors at New York Starbucks to receive tips from the coffee chain’s tip jar, despite baristas’ allegations that the shift supervisors exercised supervisory authority rendering them Starbucks’ “agent.” In re Starbucks Emple. Gratuity Litig., 264 F.R.D. 67 (S.D.N.Y. 2009). Now, following appeal of that decision and a related ruling concerning whether Starbucks can lawfully exclude assistant store managers from the very same tip pool, the Court of Appeals for the Second Circuit has asked the New York Court of Appeals, the state’s highest court, for definitive guidance as to who is an “agent” of the employer under the New York Labor Law, and thus precluded from participating in a mandatory tip pool. Barenboim v. Starbucks Corp., 2012 U.S. App. LEXIS 22061 (2d Cir. Oct. 23, 2012). Here is the relevant charge given to the New York Court of Appeals:
[We] seek further guidance from the New York Court of Appeals regarding the meaning of the words “agent” and “supervisor” under New York Labor Law. Further, we are unsure how [the Court’s direction in its 2008 World Yacht decision] to “liberally” construe § 196-d “in favor of the employees” applies where, as here, the entire dispute centers on who the employees—as opposed to the employer and his agents—are and, thus, who should benefit under the statute. Clearer direction is needed as to what factors New York views as determinative of who is an employer’s agent and, conversely, who is his employee.
The Second Circuit also asked for guidance regarding the retroactive applicability, if any, of the NY Department of Labor’s 2011 Wage Order.
This space will keep readers apprised of all relevant development. The decision by the Court of Appeals will likely bring clarity to the often perplexing rules governing tipped employees.
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[UPDATE] By letter from the Clerk of the Court dated November 27, 2012, the Court of Appeals confirmed its acceptance of the certified questions. The Court will now proceed to briefing and argument on those questions.