New York's appeals court has issued a new ruling that will help employers determine whether supervisors in the hospitality industry may participate in tip pools.
Employees with "limited supervisory responsibilities" are eligible to receive distributions from a tip pool, but employees who are "granted meaningful authority or control over subordinates" are not, the Court of Appeals of New York ruled in Barenboim v Starbucks Corp., 2013 N.Y. LEXIS 1678 (N.Y. 2013).
In a rare display of judicial specificity that should help employers determine which side a particular supervisor falls on when applying the tip credit, the court offered the following as examples of meaningful authority:
The ability to discipline subordinates, assist in performance evaluations or participate in the process of hiring or terminating employees; and
Having input in the creation of employee work schedules, thereby directly influencing the number and timing of hours worked by staff as well as their compensation.
New York allows directly tipped employees in the hospitality industry to mutually agree to pool their tips on a voluntary basis and to redistribute the tips among directly tipped employees and indirectly tipped employees who participated in providing a service. 12 NYCRR § 146-2.14; 12 NYCRR § 146-2.16.
In the Barenboim case, two baristas had sued the Starbucks Corporation, alleging that the company's policy of including shift supervisors in tip pools violated NY CLS Labor § 196-d, which forbids employers and their agents from demanding or accepting employees' tips.
The shift supervisors' supervisory responsibilities - which include assigning baristas to particular positions during their shifts, directing the flow of customers, providing baristas with feedback about their performance, opening and closing stores, changing the cash register tills and making bank deposits - rendered them agents, the plaintiffs argued.
But the court sided with Starbucks, concluding that "Meaningful authority, not final authority, should be the standard."