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24 February 2024

Court orders Starbucks to pay back $100m in tips

By Agencies



A San Diego judge on Thursday ordered coffee giant Starbucks to pay more than $100 million (Dh367 million) in tips and interest owed to staff across outlets in California.


San Diego Superior Court Judge Patricia Cowett ruled in favor of a barista from a store in La Jolla who filed a lawsuit in 2004 arguing that supervisors were unfairly receiving a share of pooled tips from customers.


Lawyers for Jou Chou had argued that Starbucks was breaching state law by allowing supervisors to receive tips instead of paying them a higher salary.


In a ruling that Starbucks immediately vowed to appeal, Cowett said the company must pay back around $87 million (Dh319.3 million) in tips plus interest of $19 million (Dh70 million) after finding the company had broken state law.


It was not immediately clear how the money might be divided up between the estimated 100,000 current and former baristas who have worked for Starbucks at different times in California since 2000.


Terry Chapko, a lawyer for the plaintiffs, was quoted by the Los Angeles Times as saying that baristas were "subsidising Starbucks labor costs" by helping the company pay its supervisors. "This is about getting money back to the lowest-paid employees," he told the Times.


Starbucks described the ruling as "not only contrary to law, it is fundamentally unfair and beyond all common sense and reason."


"Our shift supervisors deserve their fair share of the tips that they receive from the tip jars in our California stores," the statement said, adding that it plans a "vigorous" appeal.


"The decision today in our view represents an extreme example of an abuse of the class-action procedures in California courts," the company said.


The court ruling come as Starbucks has launched a series of intiatives aimed at boosting its business, which has suffered from a dip in sales and a near-50 per cent fall in share price over the past year. (AFP)