NY Court of Appeals Interprets New York Tip Statute as it Applies to Starbucks Employees

starbucks tipsYesterday in Barenboim v. Starbucks, the New York Court of Appeals (responding to the Second Circuit’s certified questions) interpreted New York Labor Law § 196-d.

That statute provides:

No employer or his agent or an officer or agent of any corporation, or any other person shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee. This provision shall not apply to the checking of hats, coats or other apparel. Nothing in this subdivision shall be construed as affecting the allowances from the minimum wage for gratuities in the amount determined in accordance with the provisions of article nineteen of this chapter nor as affecting practices in connection with banquets and other special functions where a fixed percentage of the patron’s bill is added for gratuities which are distributed to employees, nor to the sharing of tips by a waiter with a busboy or similar employee.

The Court proceeded to answer the following certified question:

What factors determine whether an employee is eligible or ineligible to receive distributions from an employer-mandated tip splitting arrangement?

In answering the certified question the Court of Appeals concluded:

an employee whose personal service to patrons is a principal or regular part of his or her duties may participate in an employer-mandated tip allocation arrangement under Labor Law § 196-d, even if that employee possesses limited supervisory responsibilities. But an employee granted meaningful authority or control over subordinates can no longer be considered similar to waiters and busboys within the meaning of section 196-d and, consequently, is not eligible to participate in a tip pool.

It specifically rejected the argument that “even the slightest degree of supervisory responsibility automatically disqualifies an employee from sharing in tips under Labor Law § 196-d.”

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