Starbucks ordered to pay out $100m in withheld tips

David Usborne
Saturday 22 March 2008 01:00

A court in California has awarded what may be the biggest tip in history.

Almost four years after a barista for the Starbucks coffee chain accused her employers of depriving her and other baristas of the tips they were meant to be receiving from customers, the court has ruled that the company must pay out more than $100m (£50m) in restitution.

In a brief ruling, just four paragraphs long, the court in San Diego concurred that the company incorrectly allowed shift managers and supervisors in its California outlets to dip into gratuities left by patrons when the money should have been distributed only to baristas making and dispensing food and drinks.

The judge told the company that it should pay back $87m in back tips plus interest of $19m.

The case only concerned operations in California, which is nonetheless the company's largest market in the United States, where it has 2,500 outlets.

The case began as little more than an annoyance for Starbucks when Jou Chou filed her complaint about shift supervisors pocketing part of tips owed to her. It became a much greater threat in 2006 when a judge granted it class action status, allowing as many as 100,000 former and current baristas to be represented.

Starbucks, which is attempting to counter a tumbling stock price and a slow-down in customer traffic, appealed against the ruling, calling it "fundamentally unfair and beyond all common sense and reason".

Far happier was Ms Chou. In a statement released by her lawyers, she said: "I feel vindicated. Tips really help those receiving the lowest wages. I think Starbucks should pay shift supervisors higher wages instead of taking money from the tip pool."

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