Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 55 Accordingly, it appears that tip-pooling cases may have been extinguished except in the unusual circumstance where an employer forces employees to share tips with their managers. B. Actions Alleging “Agents” of Management Wrongfully Took Tips The Leighton line of cases all permitted the sharing of tips among non-management employees. Employers have fared much worse, however, in cases where employees with supervisory power have shared in tip pools. Several courts have held that such tip-pooling arrangements violate the prohibition in Section 351 against “agents” of the employer sharing in the tip pools. Perhaps the highest profile of these cases was a now-overturned trial court decision in March 2008 that held Starbucks Corporation liable for $105 million in restitution to a class of approximately 120,000 baristas for the share of tips Starbucks allocated to its shift supervisors.274 These cases spring from a 2003 decision, Jameson v. Five Feet Restaurant,275 which held that it violated Section 351 for a “floor manager” to receive 10% of the tips left for servers. The Court of Appeal in Jameson noted that Section 350 defines “agent” as any person who has “authority to hire or discharge any employee or supervise, direct, or control the acts of employees.” Because the floor manager’s duties included “scheduling servers’ stations, disciplining servers, hiring employees, and recommending the discharge of employees,” Jameson concluded that there was a sufficient basis in the record to support the jury’s finding that floor managers qualified as agents. Several cases have reaffirmed Jameson and held other types of supervisory employees to be agents who may not participate in tip pools.276 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.277 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.278 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.”279 Chau held that in this kind of case it is presumed the patron intends for the tip to be shared by the 274 Chau v. Starbucks Corp., San Diego County Case No. GIC836925, rev’d, 174 Cal. App. 4th 688 (2009). 275 107 Cal. App. 4th 138 (2003). 276 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). 277 Grodensky, 171 Cal. App. 4th at 1452-53. 278 Chau, 174 Cal. App. 4th at 695. 279 Id. at 700.
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