Litigating California Wage & Hour and Labor Code Class Actions
Litigating California Wage & Hour and Labor Code Class Actions
Litigating California Wage & Hour and Labor Code Class Actions
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In the appeal of Chau, the appellate court held that “shift supervisors” at Starbucks – who<br />
performed the same work as regular employees 90 percent of the time, lacked any<br />
authority to discipline, <strong>and</strong> were not considered by the company to be part of<br />
“management” – could get a share of the tips. 171 It should be noted that the decision<br />
distinguished itself from “tip-pooling” cases because the tips in question were left in<br />
collective tip jars, making this instead a “tip apportionment” case because the tips are<br />
already “pooled.” 172 The court held that in this kind of case it is presumed the patron<br />
intends for the tip to be shared by the entire service “team,” particularly in light of the fact<br />
that it is probably difficult for the average patron to distinguish between those who are “shift<br />
supervisors” <strong>and</strong> those who are not. 173 While this decision was a significant victory for<br />
employers, the specific circumstances of the case mean that it should not be interpreted to<br />
suggest that supervisors with the powers normally attributed to managers (power to<br />
discipline, hire <strong>and</strong> fire, <strong>and</strong> give comm<strong>and</strong>s, etc.) may share in a traditional “tip pool.” It is<br />
unclear whether Section 351 was intended to preclude the supervisor from receiving tips in<br />
the situation where the tips were actually left for the supervisors.<br />
C. The Future of Tip-pooling Cases Under <strong>California</strong> Law<br />
Although it has now been clarified that certain types of tip-pooling arrangements are<br />
permissible under <strong>California</strong> law, there remained a dispute about whether Section 351<br />
contained a private right of action that allowed plaintiffs to sue under the statute at all. This<br />
dispute was finally put to rest in 2010 when the <strong>California</strong> Supreme Court decided Lu v.<br />
Hawaiian Gardens, Inc. There, the Court held that no private right of action to sue exists<br />
under Section 351, foreclosing any future tip-pooling cases under that statute. 174 What the<br />
Court did not do, however, is foreclose the possibility of tip-pooling cases altogether. The<br />
Lu Court specifically found that if an employee is entitled to misappropriated gratuities, the<br />
employee could collect them under other legal theories, e.g., conversion. 175 A plaintiff could<br />
also, most likely, recover such monies as restitution under <strong>California</strong>’s Unfair Competition<br />
Law or recover penalties for the violation under <strong>Labor</strong> <strong>Code</strong> Section 203, Section 226, or<br />
PAGA.<br />
171<br />
172<br />
173<br />
174<br />
175<br />
174 Cal. App. 4th 688 (2009).<br />
Id. at 700.<br />
Id. at 705.<br />
50 Cal. 4th 592 (“there is no clear indication that the Legislature intended to create a private cause of action under the<br />
statute”).<br />
Id. at 603-04 (“holding that section 351 does not provide a private cause of action does not necessarily foreclose the<br />
availability of other remedies”).<br />
Seyfarth Shaw LLP | www.seyfarth.com <strong>Litigating</strong> <strong>California</strong> <strong>Wage</strong> & <strong>Hour</strong> <strong>Class</strong> <strong>Actions</strong> (12th Edition) 43