You know what's cool about having this site? When readers, who could write for this site, chime in with more information than I can find in the mainstream media.
A great example? The Starbucks article I posted from yesterday on the 100 Million Dollar tip judgment. I struggled to find deeper information on the exact classification of the workers judged to have been taking tips illegally. No sweat - because an attorney who is a reader of The Capitalist in SoCal pitched in to drop the following science/knowledge:
"Chou v. Starbucks is a great example of why no one would do business in California if the
market weren't so darn large. The class at issue are shift leads. These are the folks who are responsible for making sure everyone shows up for their shift, calling the manager or assistant manager if there are any problems, making bank drops if the managers can't do so, and handling other administrative duties in addition to providing direct customer service. Starbucks classifies these employees as non-exempt because they have no authority to do anything: they can't hire, fire, promote, or demote employees. They spend most of their time making 1000 varieties of coffee, just like the baristas (some baristas are even paid more than shift leads).
But the law regarding tip pooling in California says that "agents" cannot participate in tip pooling. Judge Cowett decided, without legal, historical, or factual support, that if a store is open, someone at the store must be (sic) Starbucks's agent. And because the leads were sometimes the highest ranking individuals, they must have been the agents. So now, Judge Cowett has created a weird class of non-exempt employees who service customers but cannot share in tips. They aren't managers, so they don't get the full manager perks or responsibility. But at times they have more responsibility than Baristas so they can't be tipped.
My bet is Starbucks and other coffee shops will do away with the "shift lead" title all together and assign administrative tasks based on seniority. How Judge Cowett's ruling works in that case, I have no idea. Either that, or Coffee shops will ban the tip jars (probably the safest way to go). Also, Starbucks didn't get any advantages from allowing all their non-exempt employees from sharing in the tips. Starbucks Corporate didn't see a dime, and neither did the store managers or assistant managers. But the Judge has now ordered Starbucks to pay over $100 million dollars! Only in California."
So here's the three possible outcomes I see regarding what Starbucks and others might do in the face of this strange, but true, court decision:
1. Let the "leads" suck it up with no tips and watch this class of workers fade over the next three years as leads leave the company and no one will accept a promotion into this classification...
2. Move the leads to exempt status, along with some type of adjustment (typically not dollar for dollar) to appease the group regarding the change.
3. Eliminate tips altogether, which would be a stange outcome to all the baristas who were cheering on Friday.
#3 is unlikely since an uprising would result. No one wants to see suburbia without their latte. I'm guessing #2 is the play, if the ruling stands, since operationally you'll need the same approximate number of folks to get the administrative work done...
Only in California... Tips taken away from hourly workers!!
Kris I love your blog, but have you read FLSA?!?. Nobody is going to get leads into an exempt status; That's dangerous enough to do for assistant managers.
As a former retail manager, now in HR, I found "leads" to be critical in helping to support operations as well as providing a quasi-career track to help retain students or other experienced employees who werent willing/ready to be managers. It's a shame this has to happen. Don't expect them to get paid more in place of tips as CA has already increased the minimum wage twice.
Posted by: HR in CA | March 26, 2008 at 01:58 PM
Attempting to change a non-exempt into an exempt can be very tricky. I've never seen it done without completely reorganizing the job and spending a lot more $. In the end it doesn't seem it would be worth it. I'd love to hear from people who have had success in this area though...
Posted by: HR Wench | March 26, 2008 at 03:17 PM
HR in CA -
Hey now!!! of course I have read FSLA and have to live it like you do. The crazy thing is that you have a wacky CA judge. I don't live in CA, you do!!
Think about it. Starbucks has them classified as hourly leads, which you and I know is the way to go. So they do the right thing and the leads get hammered by the decision.
Any call on moving employees to exempt from hourly is simplified by the following question - Can the employee determine when and how they want to do the work they're responsible for? If the answer is no (leads at Starbucks can't determine when they serve coffee, it's determined by the customer flow), then to do #2, Starbucks would have to redesign the job.
And the irony is, the front line associates would end up with more work if Starbucks wanted to stay staffing neutral as a result of the change......
Sigh.... K
Posted by: Kris | March 26, 2008 at 05:41 PM