I agree with the majority to the extent that I too would answer the Second Circuit’s questions in a way favorable to Starbucks and adverse to plaintiffs in both cases. I would proceed by a simpler route, however: I think Labor Law § 196-d is inapplicable to this case.
The conduct forbidden by the statute is to “demand or accept . . . any part of the gratuities . . . received by an employee” or to “retain any part of a gratuity or of any charge purported to be a gratuity for an employee.” In plainer language, neither the boss nor (with some exceptions) a fellow worker may take or demand part of a worker’s tips. No one is doing that in this case. This case involves tips not given to any particular employee, but put into a common pool. The only issue is how the pool is to be shared among the people who earn the tips—a subject on which the statute has nothing to say. No doubt, if Starbucks itself were taking a piece of the pool, or if higher-level employees were coercing baristas to give up part of the share that Starbucks allotted them, the statute would be triggered, but that is not what is going on.
The purpose of the statute is no less plain than its language. As we said in Samiento v World Yacht Inc. (10 NY3d 70, 79 n 4 [2008]), quoting from the legislative history:
“The drafters of Labor Law § 196-d sought to end the ‘unfair and deceptive practice’ of an employer retaining money paid by a patron ‘under the impression that he is giving it to the employee, not to the employer’ (see Mem of Indus Commr, June 6, 1968, Bill Jacket, L 1968, ch 1007, at 4).”
This case does not involve that “unfair and deceptive practice” or anything resembling it, and that should end the case.
Some federal decisions have made the New York law of tipping more complicated than it needs to be by drawing an analogy between Labor Law § 196-d, a simple prohibition of a rather clear abuse, and 29 USC § 203 (m), which deals with a less simple question of federal law: the extent to which an employer may credit tips against the minimum wage (see Shahriar v Smith & Wollensky Rest. Group, Inc., 659 F3d 234, 241 [2d Cir 2011] [“Thus, 29 U.S.C. § 203(m) and § 196-d bar the same *476types of tipping practices, and actions that violate the tip pooling provision of 29 U.S.C. § 203(m) may also violate § 196-d”]). But we are not bound by the federal courts’ interpretation of New York law, and I would not follow it here. I think more useful guidance can be found in Jou Chau v Starbucks Corp. (174 Cal App 4th 688, 94 Cal Rptr 3d 593 [2009]), in which the court interpreted California Labor Code § 351, a statute quite similar to our section 196-d. Under the California statute: “No employer or agent shall collect, take, or receive any gratuity or a part thereof that is paid, given to, or left for an employee by a patron.”
Jou Chau was a class action by Starbucks baristas essentially identical to the Barenboim case we have here. The court dismissed the case, drawing a distinction between an employer’s authority to compel the sharing of a tip “given to an individual service employee” and the authority “to require equitable allocation of tips placed in a collective tip box” (174 Cal App 4th at 691, 94 Cal Rptr 3d at 594-595 [emphasis omitted]). The Jou Chau court decided the case without interpreting the term “agent” in Labor Code § 351, concluding that “[e]ven if shift supervisors can be considered ‘agents’ . . . Starbucks did not violate section 351 by permitting shift supervisors to share in the tip proceeds that were left in a collective tip box for baristas and shift supervisors” (174 Cal App 4th at 696, 94 Cal Rptr 3d at 598). The policy behind section 351, the court explained, was “to protect employees from employers who used their positions to unfairly command a share of the employee’s tip” (id.). Because the distribution of a common tip pool does not implicate that policy, the court held section 351 not to be violated. I would adopt a similar line of reasoning here.
Because I think the statute is inapplicable, I would answer no to question 1 (b) (asking whether Labor Law § 196-d precludes an employee with supervisory or managerial authority from sharing in a common tip pool) and yes to question 2 (asking whether an employer may exclude an otherwise eligible tip-earning employee from such a pool), and would treat the other questions as academic. The majority’s contrary approach extends the statute to a situation that does not involve the abuse the legislature sought to prohibit—or, as far as I can see, any abuse at all. This has the unfortunate effect of leaving open a large category of tips to regulation by the Department of Labor and to litigation over when the tips have and have not been properly distributed. What good this does, other than the full employment of regulators and of lawyers, is not clear to me.