A recent decision by the 1st Circuit of the United States Courts of Appeal provides a valuable lesson to restaurant and food service companies who engage in tip sharing. Recently, the First Circuit held that shift supervisors had managerial responsibility thereby making them ineligible to share in tips under a Massachusetts statute. While Starbucks argued shift supervisors did not qualify as managers under the statute because they devoted up to ninety percent of their time performing the same functions as baristas and did not have authority to hire, fire, or discipline, the Court found that the statute indicated that the sharing of tips was only permitted among those with "no managerial responsibility."
Celebrity Chef Mario Batali reached a settlement of alleged tip credit improprieties with approximately 1,100 tipped employees who worked in several of his restaurants including Babbo, Del Posto, Casa Mono, Bar Jamon, Esca, Lupa and Otto. The class-action suit brought on behalf of waiters, captains, servers, busboys, runners, and bartenders is similar to many others in the past several years concetrating on restaurants in New York and elsewhere. The lawsuit alleged that Batali, business partner Joseph Bastianich, and their restaurants had a policy of impermissibly deducting an amount between 4 to 5 percent of total wine sales at the end of each night from the tip pool and keeping the money.