Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) 47 Several cases have reaffirmed Jameson and held other types of supervisory employees to be agents who may not participate in tip pools.256 Grodensky, however, affirmed a trial court finding that “floor managers” were not agents, because they lacked the power to hire and fire and because their power to supervise, direct, or control the acts of the dealers was limited to resolving disputes between customers and the dealers.257 In the appeal of Chau v. Starbucks Corp., the Court of Appeal held that “shift supervisors” at Starbucks—who performed the same work as regular employees 90 percent of the time, lacked any authority to discipline, and were not considered by the company to be part of “management”—could get a share of the tips.258 It should be noted that the decision distinguished itself from “tip-pooling” cases on the basis that the tips in question were left in collective tip jars, making this instead a “tip apportionment” case because the tips are already “pooled.”259 Chau held that in this kind of case it is presumed the patron intends for the tip to be shared by the entire service “team,” particularly in light of the fact that it is probably difficult for the average patron to distinguish between those who are “shift supervisors” and those who are not.260 While Chau was a significant victory for employers, the specific circumstances of the case mean that it should not be interpreted to suggest that supervisors with the powers normally attributed to managers (power to discipline, hire and fire, and give commands, etc.) may share in a traditional “tip pool.” It is also unclear whether Section 351 was intended to preclude a supervisor from receiving tips in the situation where the tips were actually left for the supervisor. C. The Future of Tip-Pooling Cases Under California Law The California Supreme Court’s 2010 decision in Lu v. Hawaiian Gardens, Inc., clarified that there is no private right of action to enforce Section 351, foreclosing any future tip-pooling cases under that statute.261 What the Supreme Court did not do, however, is foreclose the possibility of tip-pooling cases altogether. The Lu Court specifically found that if an employee is entitled to misappropriated gratuities, the employee could collect them under other legal theories, e.g., conversion.262 A plaintiff could also, most likely, recover such monies as restitution under California’s Unfair Competition Law or recover penalties for the violation under Labor Code Section 203, Section 226, or PAGA. 256 Hawaiian Gardens, 170 Cal. App. 4th at 485-86 (triable issue of fact whether customer service representatives qualified as agents because they had responsibility to write reports about and evaluations of tipped dealers), aff’d, 50 Cal. 4th 592 (2010); Grodensky, 171 Cal. App. 4th at 1409-10 (shift managers who assigned work, had power to discipline and were responsible for operation of casino in card room manager’s absence were agents not permitted to share in tip pool). 257 Grodensky, 171 Cal. App. 4th at 1452-53. 258 Chau, 174 Cal. App. 4th at 695. 259 Id. at 700. 260 Id. at 705. 261 Lu v. Hawaiian Gardens Casino, Inc., 50 Cal. 4th 592, 600 (2010) (“[T]here is no clear indication that the Legislature intended to create a private cause of action under the statute.”). 262 Id. at 603-04 (“[H]olding that section 351 does not provide a private cause of action does not necessarily foreclose the availability of other remedies.”); but see Wilkes v. Benihana, Inc., Case No. 16cv2219 JM (DHB), 2017 WL 784231, at *34 (S.D. Cal. Feb. 28, 2017) (dismissing tip-pooling claim branded as one for conversion and unfair competition because the plaintiff failed to allege a violation of Labor Code section 351).
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