A former barista sued Starbucks earlier this month in New York claiming that the company required counter tips to be shared with shift supervisors in violation of state law. That lawsuit followed a $100 million judgment in California last month against Starbucks in a lawsuit alleging similar conduct. In the days following the California judgment, a similar complaint was filed in Massachusetts (see earlier blog entry below).
California???s tip pooling statute is similar to New York???s, which may lead to similar results in the New York lawsuit. California bars employers and their agents from receiving any gratuity or a part thereof paid to an employee. Cal. Labor Code ?? 351. The Court???s Order in the California lawsuit indicates that, ??????shift supervisors being agents are precluded from sharing in tips from the tip pool.??? The Court thereby rejected Starbuck???s position, according to the New York Times, that shift supervisors are not agents because they are not managers, have no managerial authority, and often perform the same work as baristas.
Similar to California, New York bars employers, their agents, or any other person, from demanding or accepting, directly or indirectly, any part of the gratuities received by an employee. NY Labor Law??196-d.Accordingly, if the New York court agrees with the California decision that shift supervisors are Starbucks???s agents, it could find that they improperly received money from the tip pool.
According to the New York Times, Starbucks said it would appeal the California decision, asserting that shift supervisors perform work much like the baristas. We will see if Starbucks has sufficient ???grounds??? for appeal.
An attempt by Connecticut waitstaff to bring a class action over the ???tip credit??? against minimum wages taken by Connecticut restaurants and hotels was the subject of a recent Connecticut Supreme Court opinion, as reported in the Hartford Business Journal on March 3. NKMS represented the employer defendant, Friendly Ice Cream Corporation, with Bill Saturley arguing before the Court. The Court ruled in an opinion dated February 12, 2008 that the 37 waitstaff must first process each of their individual claims through the Superior Court system before they can appeal the lower court???s ruling denying them class action status. Some observers quoted in the article said the ruling will make it much tougher for employees to establish class action status, giving employers a stronger position to deflect similar future lawsuits.
In early April, a federal jury hearing a case before the US District Court for the District of Massachusetts found that American Airlines was liable for $325,000 in tips that Skycaps claim they lost after the airline allegedly improperly implemented a new fee for curbside baggage check-in. The Boston Globe, posting on Boston.com, reported that some Skycaps may receive as much as $64,000 in back tips – even though many Skycaps acknowledged that they had underreported tips to the IRS for many years and may owe back taxes and penalties. Coming on the heels of the recent decision in Chou v. Starbucks, filed in California, and a similar action against Starbucks filed in Massachusetts (see entry below), this case may signal an expanding willingness by Massachusetts juries to credit claims for alleged improper handling and distribution of tips by employers.
A former assistant manager, suing Cracker Barrel for terminating him after he complained about race discrimination, is using a very old statute to survive a challenge that he waited too long to bring his claim.
Title VII of the 1964 Civil Rights Act requires plaintiffs to file a charge of discrimination within either 180 days or 300 days of the last act of discrimination, depending on the jurisdiction, in order to preserve a claim. The former employee failed to meet that time frame. He may still win his case, however, because he also sued under another civil rights statute, Section 1981 of the 1866 Civil Rights Act, which allows plaintiffs to wait 4 years before bringing a claim. While the lower court dismissed the employee???s Title VII claim for failing to pay the filing fee on time, the court did not dismiss the Section 1981 claim because the statute of limitations had not run. The 7th Circuit Court of Appeals affirmed. The case is now on appeal to the United States Supreme Court, and was argued on February 20. CBOCS West, Inc. v. Humphries, Docket 06-1431.
It is unclear how the Court will decide this case. While Title VII expressly outlaws employment discrimination and retaliation for raising complaints about discrimination, Section 1981 protects an individual???s right ???to make and enforce contracts.??? Although the statute has been interpreted to cover employment relationships, it does not expressly outlaw retaliation. While Cracker Barrel and other business groups have argued against reading an additional proscription into the statute, the former employee and others, including the United States Solicitor General, respond that permitting Cracker Barrel to evade responsibility will encourage others to circumvent the law.
Allowing the action to proceed under Section 1981 poses additional risks to employers. While Title VII caps punitive damages, Section 1981 imposes no limit on damages that may be recovered.
The obvious response of employers should be to strive to avoid retaliation claims altogether, by training managers well and enforcing internal anti-discrimination and anti-retaliation policies consistently. Even employers who have not committed an act of discrimination can fall into the retaliation trap, and liability for retaliation claims can be no less costly than for simple discrimination claims.
Judith Feinberg, who has recently joined NKMS and is the newest member of the Group, has contributed the following for employers of all kinds, including those in the hospitality industry:
You hear almost daily news reports about security breaches at companies that result in the release of confidential information. It could be customer information, personnel files, healthcare information or other kinds of personal information that many businesses routinely maintain. Yet, Congress has failed to enact any uniform federal legislation to govern what companies should do in the event of a breach of confidential data security. Some industries, like banking or covered entities under HIPAA, may have their own particular requirements, but other businesses have no federal guidance in the area. Many states have, however, enacted their own statutes concerning data breaches, which has led to a patch work of requirements across the country. Quite recently, Massachusetts enacted Mass. Gen. Laws. Chapter 93H. That statute imposes, among other things, specific duties on holders of data who become aware of any data breach, requiring notice to the persons whose data was accessed and in some cases notice the Attorney General???s Office and other agencies. This comprehensive statute may well become the model for best practices in other jurisdictions and may also pave the way for more standard, federal legislation. For now, the law varies widely among the several states. You should contact legal counsel immediately if you have experienced a data breach, as many state laws require companies to act “without undue delay” in order to avoid regulatory action or civil liability.