The Court of Appeals for the First Circuit has ruled that under Massachusetts’ unique tip statute, shift supervisors cannot participate in the tip jar-based tip pool in Massachusetts locations. Matamoros v. Starbucks Corp., 2012 U.S. App. LEXIS 23185 (1st Cir. Nov. 9, 2012). Several years ago, a California Appeal Court ruled just the opposite under California state law.
In Matamoros, the First Circuit confronted the issue of whether a shift supervisor was a proper tip pool participant under the novel language of the Massachusetts’ Tips Act, Mass. Gen. Laws ch. 149, § 152A, which limits tip pool participation to individuals employed as “a waiter, waitress, bus person, and counter staff, who: (1) serves beverages or prepared food directly to patrons, or who clears patrons' tables; (2) works in a restaurant, banquet facility, or other place where prepared food or beverages are served; and (3) who has no managerial responsibility.” Observing that this conjunctive test required Starbucks to meet all three prongs, the court focused on the last prong, whether shift supervisors possessed any “managerial responsibility.” Applying this literal Massachusetts-specific statutory definition without reference to legislative history or other extrinsic materials, the court concluded that the Tips Act “says what it means and means what it says” and, because the shift supervisors directed the work of others, the ruling that they should not have participated in the tip pool was correct.
Matamoros poses concerns for hospitality employers in Massachusetts, where it has now been clarified that tip pool participation is greatly constrained by the language of the Tips Act. While it is possible Starbucks will seek review of this decision from the United States Supreme Court, review of this state law issue does not seem likely. All Massachusetts hospitality employers should review their tip practices in response to this decision.