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Regulators: Starbucks illegally denied raises to union members

Aug. 26, 2022 Updated Fri., Aug. 26, 2022 at 7:08 p.m.

Howard Schultz, the chief executive of Starbucks, speaks at a conference in Washington, June 9, 2022.  (By Amanda Andrade-Rhoades/New York Times)
Howard Schultz, the chief executive of Starbucks, speaks at a conference in Washington, June 9, 2022. (By Amanda Andrade-Rhoades/New York Times)
By Noam Scheiber New York Times

Federal labor regulators have accused Starbucks of illegally discriminating against unionized employees by denying them wage and benefit increases that the company put in place for nonunion employees.

In a complaint Wednesday, a regional office of the National Labor Relations Board accused the company of breaking the law when its CEO, Howard Schultz, “promised increased wages and benefits at U.S. stores if its employees rejected the union as their bargaining representative,” and when it withheld raises and benefits from unionized workers.

The labor board is seeking, among other things, that affected employees be made whole for the denial of benefits and wage increases. It is also asking that Schultz read a notice to all employees informing them that some had been unlawfully denied benefits and pay increases and explaining their rights under federal labor law. Alternatively, a board official could read this material to employees in Schultz’s presence.

The labor board’s case is scheduled for a hearing Oct. 25 before an administrative law judge, unless Starbucks settles with the agency beforehand. Starbucks could appeal any ruling by an administrative judge to the full board.

In a statement, Starbucks said that it was required under federal law to negotiate changes in wages and benefits with the union and that it was therefore not allowed to implement such changes unilaterally, as it can in nonunion stores. “Wage and benefits are ‘mandatory’ subjects of the collective bargaining process,” the statement said.

Workers United, the union representing the company’s newly organized workers, said the complaint affirmed its contention that Starbucks was discouraging union activity.

“He claims to run a ‘different kind of company,’ yet in reality, Howard Schultz is simply a billionaire bully who is doing everything he can to crush workers’ rights,” Maggie Carter, a worker who helped unionize her store in Knoxville, Tennessee, said in a statement.

More than 225 out of roughly 9,000 corporate-owned Starbucks locations in the United States have voted to unionize since last fall.

Schultz began indicating that the company would roll out new benefits, but only for nonunion workers, shortly after he began his third tour as the company’s CEO in April.

The following month, the company announced a series of new benefits – including additional career development opportunities, better tipping options and more sick time – but only for stores that hadn’t unionized or weren’t in the process of unionizing. The benefits were to begin in the coming months.

The company unveiled wage increases as well, some of which had already been announced and which the company said would apply to all workers. But other increases were new and would apply only to nonunion workers.

For example, according to Reggie Borges, a Starbucks spokesperson, all employees stood to benefit from a companywide $15-an-hour minimum wage, but nonunion workers hired by May 2 would get a 3% raise if that proved higher than $15.

The wage policy appears to have sown confusion, with some employees briefly receiving a pay increase that was then withdrawn. Colin Cochran, a worker at a store near Buffalo, New York, that initially voted to unionize and then voted against the union in a rerun election decided this month, provided pay stubs showing that his $16.28 hourly wage had increased to $16.77 the first week of August, when Starbucks began the pay increases nationwide. But Cochran’s pay stub for the second week of August showed his hourly pay dropping back to $16.28. (The union is challenging the election loss at this store.)

Borges said that the reversion to the previous wage resulted from an inadvertent error and that unionized stores would get wage increases in September.

Workers involved in union campaigns at other Starbucks locations said the denial of pay and benefit increases to unionized stores had slowed their organizing efforts.

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