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Starbucks Owes Big Bucks in Mass.

posted Nov 12, 2012, 1:59 PM by Adam Chandler   [ updated Jan 14, 2013, 12:23 PM ]
In a recent decision, Matamoros v. Starbucks Corp., the First Circuit Court of Appeals affirmed a District Court ruling that Starbucks violated the Massachusetts Wage Act by requiring that baristas share their tip pool with their shift supervisors.  As a result, Starbucks owes Massachusetts baristas employed between 2005 and 2011 approximately $14 million.

The Court based its opinion on the plaint language of the statute and the adage that "no means no."  The Massachusetts Tips Act provides that "wait staff employees" may not be required to share tips with anyone who is not a "wait staff employee."  The definition of "wait staff employee" requires that the individual has "no managerial responsibility."

In this case, the evidence demonstrated that there was a large overlap in the duties performed by baristas and shift supervisors, that shift supervisors were paid by the hour rather than salaried, and that shift supervisors reported to managers and assist managers.  Nonetheless, the Court found that shift supervisors did have some level of management responsibility that baristas did not possess.  Some being more than "not any," the Court ruled that Starbucks violated the Tips Act when it required baristas to share their tips with shift supervisors.

Additionally, the Court affirmed the lower court's ruling regarding the application of multiple damages under the Massachusetts Wage Act.  The District Court found that, effective July 12, 2008, the language of the Wage Act was amended to require the automatic assessment of treble damages for violation of the Wage Act.  The Court of Appeals agreed and affirmed this portion of the ruling as well.  

Starbucks had challenged the automatic application of multiple damages under the Wage Act on the ground that it unconstitutionally required that assessment of multiple damages without a finding regarding Starbucks' state of mind.  The Court rejected this argument, but it may provide Starbucks with an avenue to pursue this appeal to the U.S. Supreme Court if it so chooses.
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