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LEGAL LOOPHOLE?

Starbucks is raising pay—but only for workers at non-union stores

Starbucks worker with a visor
Mark Makela
  • Sarah Todd
By Sarah Todd

Senior reporter, Quartz and Quartz at Work

Published

Among the reasons more than 200 Starbucks stores have unionized since last fall is workers’ desire for better pay and benefits. As of Aug. 1, Starbucks is rolling out pay increases for store employees who’ve been with the company for at least two years—but excluding workers at unionized stores.

Starbucks says that it’s legally bound to exclude unionized workers. “Once a store unionizes, no changes to benefits are allowed without good faith collective bargaining,” a Starbucks spokesperson said in a statement.

But labor advocates say Starbucks’ move is the latest in a series of tactics intended to discourage more stores from organizing, including firing pro-union workers and shuttering unionized stores.

“They’re misrepresenting what the law says in a way that obviously is intended to make the tactic appear legal, when in fact I would say it’s not,” says John Logan, a professor and labor historian at San Francisco State University.

Is it legal for Starbucks to exclude unionized workers from new benefits? 

It’s true that, after employees vote to unionize, US labor law does not allow companies from making changes to pay or benefits without first negotiating with the union. The idea is that forcing companies to maintain the status quo after employees unionize helps prevent them from retaliating by reducing pay or benefits, or from unilaterally making changes as a way of signaling to employees that the union doesn’t have any real power.

But Starbucks’ argument is complicated by the fact that Workers United, the union representing Starbucks stores, explicitly told the company in a letter dated July 15 that it waives any objections to Starbucks providing unionized workers with the same improvements to pay or benefits that it offers to employees at non-unionized stores.

“Starbucks is permitted by law to offer these benefits to employees at unionized stores with the union’s agreement,” Workers United international president Lynne Fox said in the letter, which was reviewed by Quartz, addressed to Starbucks interim CEO Howard Schultz.

Starbucks declined to comment on the union’s willingness to greenlight the benefits.

If the case goes before the US National Labor Relations Board, which is charged with enforcing labor laws, Logan says he’d expect the union to prevail. At that point, Starbucks would owe workers back pay. But even if the NLRB rules that Starbucks violated the law, the process of the case winding its way through the court could take months.

Catherine Creighton, director of Cornell University’s Industrial and Labor Relations School in Buffalo, New York, tells CNBC that she also believes Workers United is correct about the law. “If the union says they have no objection, then the employer can absolutely give them that benefit,” she says.

Will Starbucks’ policies slow the organizing wave?

Schultz first announced the benefits available only at non-unionized stores back in May. Under the changes, employees with two to five years’ experience receive at least a 5% raise or a bump to 5% above the market start rate, whichever is the higher of the two. Employees at a Starbucks store for more than five years receive a minimum 7% raise or move to 10% above market start rate.

In the months since Schultz’s announcement, the quantity of Starbucks stores petitioning to unionize has slowed. That has been the greatest obstacle to getting workers to move forward with petitions,” he says. “They’re scared that they’ll lose out on the [improved] wages and benefits.”

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