Delaware Employment Law Blog

The Equal Employment Opportunity Commission (EEOC) can add another major victory to the scorebooks.   Earlier this week, the Commission settled a discrimination lawsuit for $2.2 million.  The actions at issue are said to trace back to a supervisor who is no longer with the restaurant.  This should be a wake-up call for employers who don't provide employment-law training to supervisors, helping to prevent and eliminate discrimination and harassment in the workplace. 

Tavern on the Green

The hottest headline for EEOC settlements right now is the agreement reached with the legendary N.Y.C. landmark restaurant, Tavern on the Green. Earlier this week, the New York Times reported that the restaurant, located in Central Park, had agreed to pay $2.2 million to settle a sexual-harassment claim filed by the EEOC last September.

Tavern on the Green is a destination for many Big Apple visitors with discriminating tastes, as well as a regular dinner spot for the who's who of New York's social scene.  The restaurant opened in 1934 and, in the 50+ years since, has become the "highest-grossing independently owned restaurant in the United States with annual revenues in excess of $34 million and over half a million visitors a year."

The Allegations Were Many

The suit alleged a whole host of claims including discrimination, harassment, and retaliation.  The alleged harassment was said to include groping female staff members, the regular use of graphic sexual comments, and demands for sexual favors.

The discrimination allegations involved Hispanic employees, who were allegedly ridiculed and name-calling.  Black employees were alleged to have received similarly hostile treatment. 

As could be expected, the iconic restaurant denied any wrongdoing as part of the settlement. Representatives also claimed that the target of the suit, the managers accused of engaging in severe and pervasive harassment, separated from the restaurant several years ago.

The conduct is said to have stemmed primarily from one long-time manager who has since left the restaurant's employment. 

Take Away

What can employers learn from this case?

Well, for one, even the giant can fall.  The Tavern is legendary--a Goliath in a city of Goliaths.  After nearly 75 very successful years in operation, even the Tavern was not immune from the EEOC's watchful eyes. 

But there's another lesson to be learned here.  The idea that just one supervisor, if left unchecked, can cost your business a lot--a lot of money, a lot of time, and a lot of bad publicity.  Had this supervisor been trained in employment laws, would he have chosen not to engage in such conduct?  Likely not.  But perhaps others would have recognized the serious repercussions of his conduct and put a stop to it before it turned into major liability.

This case is a very good advertisement for harassment and discrimination training for managers.  By setting ground rules for managers to enforce and to follow, employers can take action in preventing this type of detrimental lawsuit.

N.Y. Times: Tavern on the Green to Pay $2.2 Million to Settle Harassment Claim

The Third Circuit, which governs Delaware, New Jersey, and Pennsylvania, applied a strict interpretation of Rule 23(f) and affirmed dismissal of a class action against Johnson & Johnson. The case, Gutierrez v. Johnson & Johnson, was filed by African-American and Hispanic former J&J employees alleging race discrimination--8,600 employees in all.

The federal District Court in New Jersey declined to certify the group as a class. Notably, the court found that the group had failed to identify any J&J policy that was discriminatory. The court also cited the diversity and size of the group as factors weighing against class certification.

Now, hang in there, this is where it starts to get complicated.

The potential class could have filed an appeal with the Third Circuit after the District Court issued its decision denying certification. But, instead, they wanted to file a motion for reconsideration. J&J agreed to an extension of time for the employee to file their motion. The court granted the requested extension but eventually denied the motion for reconsideration, upholding its denial of class status.

The employee-petitioners sought permission tofile an interlocutory appeal with the Third Circuit. The petition was filed within ten days of the District Court’s denial of their motion for reconsideration but 125 days after the original decision denying class certification.

A petition to appeal must be filed within 10 days. When a motion for reconsideration is timely filed, though, the 10 day-clock stops running until the motion is decided. Here, the employee-petitioners filed their motion within the deadline set by the District Court's scheduling order. That was not enough for the Third Circuit. Instead, the court found that the 10-day requirement was mandatory--within 10 days of the decision denying class certification, the party has 10, and only 10, days within which to file an appeal.

The fact that the motion for reconsideration was timely for purposes of the District Court’s scheduling order did not matter. According to the Third Circuit, much to Johnson & Johnson's relief, Rule 23(f) of the Federal Rules of Civil Procedure is strict and mandatory.

Oh, Starbucks! Why is it that everyone always seems to be picking on you?!

This time, it seems that some baristas don't like to share.

On Thursday, March 20, a California Superior Court judge in San Diego awarded a class of 100,000 baristas an astounding $105 million in unpaid tips. Now that's a LOT of quarters tossed in the metal milk frother, eh?

The suit was initiated by Jou Chau, a college student who worked at a San Diego Starbucks location in 2003-2004. He filed the suit that was later converted into a class action.

The claim alleges that supervisors wrongfully shared in the employees' tips. California law permits tip pooling--where everyone tosses their tips in the pool and then the tips are divided evenly among all who contributed. But pooling wasn't the problem. California law prohibits restaurant owners or their "agents" from sharing in the pool. "Agents" has generally been interpreted as managers and supervisors.

Like the counter employees, ("baristas" as they're known to most), shift supervisors at Starbucks make coffee and serve customers. They do the same work as the beloved baristas but they are also responsible for setting work schedules and managing employees.

Fair or Unfair?

So why can't they share in the reward? To some, this line might seem a bit attenuated. The purpose of the division between supervisor and employee is a reasonable one. Owners and managers who don't have to slave away with the employees who deal directly with the public shouldn't be able to swoop in at the end of the shift just to take their "share" of the booty. In that context, the law seems perfectly fair.

But in the Starbucks scenario, the fairness seems to fade some. If the dividing line between "supervisor" and "employee" is little more than who makes the weekly schedules and who has the pleasure of taking customer complaints, it doesn't seem strikingly unfair that they should share in the tip pool. Afterall, their expert frothing skills likely helped earn some of the tips.

Wider Implications

Starbucks, the Seattle-based coffee chain, said it would appeal the decision, which it described as “fundamentally unfair and beyond all common sense and reason.” But if the appeal is unsuccessful, the implications of the decision could have real impact on the day-to-day operations of stores. Starbucks would likely have to stop using supervisors for double-duty--they could either do supervisory duties or employee duties, but not both.

Given the size of the stores, does it really seem practical to have a supervisor assigned to every shift who hangs out in the office while the baristas sweat it out at the espresso machine? Probably not. But why would supervisors do the work required of the baristas and not be eligible for the same rewards? And don't forget the cost! An added employee would be needed to cover the work that the supervisor can no longer perform.

But the real question on the minds of coffee lovers across the nation is, "Will this mean a price hike for our morning cup?" Now that is a serious implication, for sure!!

The N.Y. Times reported this story on Friday, March 21. And the Starbucks Union (IWW Starbucks Workers Union) has a different viewpoint, which you can read about here.

[Hat tip to the Class Action Defense Blog]