Starbucks Steamed Over $100M Verdict — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Starbucks Steamed Over $100M Verdict

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in Compensation and Benefits,Human Resources,Leaders & Managers,Management Training

A California Superior Court judge has ordered coffee giant Starbucks to pay its baristas $100 million in lost tips resulting from the company’s tip jar policy. Additionally, the court issued an injunction barring shift supervisors and managers from receiving tips.

The situation has been brewing since October 2004, when one disgruntled barista filed a complaint arguing that management personnel weren’t entitled to tips under California state law. In 2006, the case boiled over when a California judge granted it class-action status.

Advice: Although this case relates directly to California employers, it carries a lesson that’s applicable everywhere. Always check state laws before establishing compensation policies. Knowing federal laws—such as the Fair Labor Standards Act (FLSA)—won’t always be enough. Workplaces in which employees commonly receive tips pose special challenges. Make sure your compensation system account...(register to read more)

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