Starbucks union asks coffee giant to extend wage and benefits hike to union stores

As wage increases begin at Starbucks coffee shops across the United States Monday, labor regulators are asking the coffee giant to extend benefits to union stores as well without going through the bargaining process.

The request comes after Starbucks announced in May that it would raise workers’ wages and add other benefits such as a credit card tip later this year. But the Seattle-based coffee chain said it wouldn’t offer the boosted benefits to union-store workers because it needed bargaining to make such changes.

In a letter to Starbucks CEO Howard Schultz obtained by CNBC, the United Labor Organization said the company could legally offer benefits to employees in union stores without bargaining, as long as the union agreed. The letter notes other company-wide benefits that have been announced in recent months, including faster entitlement to sick time and reimbursement for medical travel for employees seeking abortion or sex reassignment care.

“United Workers refuse to stand idly by, while Starbucks is promising new benefits only to non-union workers, and withholding them from our members,” reads the letter from Lane Fox, president of the labor union, to Schultz last month.

The letter states that the union does not waive any other negotiating obligation Starbucks has under federal law.

About 200 Starbucks stores have joined unions so far, while 40 stores have voted not to join unions, according to the National Labor Relations Board. Starbucks has nearly 9,000 locations in the United States

When contacted about a union order, Starbucks pointed to a fact sheet on its website that states, “The law is clear: Once a store is united, no changes to benefits are permitted without collective bargaining in good faith.”

The company’s website says workers can access Starbucks benefits that were in place when the union petition was filed, but that any subsequent changes to pay, benefits and working conditions must be bargained for.

Labor lawyers say the case could end up before an administrative law judge at the National Labor Relations Board.

“Once a union is approved, the employer is obligated to negotiate with that union before making any changes to the terms and conditions of employment,” said Stephen Holroyd, an attorney at Jennings Sigmund who has represented unions and worked for the NLRB.

But he said the union is green-lighting benefits without compromising the situation, and he might argue Starbucks is withholding benefits because of its regulated campaign.

Daniel Sobol, an attorney at Stevens & Lee who has represented the companies in union cases, said the NLRB and federal courts disagreed on the issue.

“if [ benefit enhancements are] It was only done to calm union formation, and that could be a problem.” But with employers adjusting wages in an inflationary environment, he said Starbucks may not be obligated to give raises to union employees.

Gabi Frumkin, an attorney for Starbucks Workers United, said the benefits are clearly being offered in response to the union’s campaign. He said the ULO has filed two charges linked to Starbucks wage and benefits advertisements for non-union stores and is considering further options.

Catherine Creighton, director of the College of Industrial and Labor Relations at Cornell University in Buffalo, New York, said the law requires companies to notify unions of new benefits and the opportunity to bargain for them. But, she said, “if the union says it has no objection, the employer can give it that benefit.”

Pay increases that will take effect this week include a raise of at least 5%, or a move to 5% above market rate, whichever is higher, for employees with at least two years of experience. Employees with more than five years of experience get at least a 7% raise, or they move to 10% above market rate, whichever is higher. The increases come on top of a hike previously announced this month that brings wages to a minimum of $15 an hour nationally. This increase is available to stores that have not started regulation before it was announced.

Starbucks said it plans to spend $1 billion on increasing wages, improving training, and stockpiling innovation during fiscal 2022. When Schultz returned to his role as CEO for the third time, he suspended the company’s buyback program to invest in workers and stores.

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