Starbucks union asks coffee giant to extend pay hikes, benefits to unionized stores

With pay increases set to kick in at Starbucks cafes around the U.S. on Monday, labor organizers are asking the coffee giant to extend the benefits to unionized stores as well without going through the bargaining process.

The request comes after Starbucks announced in May that it would hike wages for workers and add other benefits such as credit card tipping by late this year. But the Seattle-based coffee chain said it wouldn’t offer the enhanced benefits to workers at unionized stores because it needs to go through bargaining to make such changes.

In a letter to Starbucks CEO Howard Schultz obtained by CNBC, Workers United said the company can legally offer benefits to employees at unionized stores without bargaining, as long as the union agrees. The letter notes other companywide benefits announced in recent months, including faster sick time accrual and medical travel reimbursement for employees seeking abortions or gender-reaffirming care.

“Workers United refuses to stand by while Starbucks cynically promises new benefits only to non-unionized workers and withholds them from our members,” states the letter from Lynne Fox, president of Workers United, to Schultz last month.

The letter notes the union is not waiving any other bargaining obligation that Starbucks has under federal law.

About 200 Starbucks stores have unionized so far, while 40 have voted not to unionize, according to the National Labor Relations Board. Starbucks has roughly 9,000 locations in the U.S.

When contacted about the union’s request, Starbucks pointed to a factsheet on its website that states, “The law is clear: once a store unionizes, no changes to benefits are allowed without good faith collective bargaining.”

The company’s site says workers have access to Starbucks benefits that were in place when the union petition was filed, but that any subsequent changes to wages, benefits and working conditions have to be bargained.

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

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

But he said that the union greenlighting the benefits without bargaining changes the situation, and that it could argue Starbucks is withholding the benefits because of its organizing campaign.

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

“If [benefit enhancements are] done solely to chill unionizing, that could be an issue,” he said. But with employers adjusting wages in the inflationary environment, he said Starbucks might not be obligated to give the raises to unionized employees.

Gabe Frumkin, an attorney for Starbucks Workers United, said it’s clear the benefits are being offered in response to the union drive. He said Workers United has filed two charges tied to Starbucks’ wage and benefits announcements for nonunionized stores and is considering further options.

Catherine Creighton, director of Cornell University’s Industrial and Labor Relations School in Buffalo, New York, said the law requires companies to give a union notice of a new benefit and the opportunity to bargain over it. But she said that, “if the union says they have no objection, then the employer can absolutely give them that benefit.”

The pay hikes going into 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 experience. Employees with more than five years of experience get a raise of at least 7%, or move to 10% above market rate, whichever is higher. The increases are in addition to a previously announced hike kicking in this month that gets wages to a floor of $15 an hour nationally. That increase is available to stores that did not start organizing before it was announced.

Starbucks has said it plans to spend $1 billion on wage hikes, improved training and store innovation during its fiscal 2022. When Schultz returned to his role as CEO for a third time, he suspended the company’s buyback program to invest in workers and stores.