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Starbucks ordered to repay tips and interest to baristas
'SUBSIDIZING':
Lawyers argued that the coffee chain broke the law by giving supervisors a part of baristas' tips instead of paying higher salaries
AFP, LOS ANGELES
Saturday, Mar 22, 2008, Page 10
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"This is about getting money back to the lowest-paid employees."
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Terry Chapko, US lawyer
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A San Diego judge on Thursday ordered coffee giant Starbucks to pay more than US$100 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 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 US$87 million in tips plus interest of US$19 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 "subsidizing 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 came as Starbucks launched a series of intiatives aimed at boosting its business, which has suffered from a dip in sales and a near-50 percent fall in share price over the past year.
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