Starbucks’s new benefits and wages and its legal tussle with union

Starbucks announced new benefits for its employees on Nov. 6, part of ongoing investments to “uplift the overall partner and store experience,” the company said in a statement.

The new benefits for employees (called “partners” by Starbucks management) include pay raises, earlier vacation accrual, and more flexible scheduling. Like many retailers, Starbucks has raised pay over the past few years to compete for talent. Average hourly pay at the coffee chain is now nearly $17.50 an hour, up from $14 in 2021.

But the announcement was a flashpoint in an ongoing dispute between Starbucks and Starbucks Workers United (SBWU)—which has unionized some 360 stores—over wages and benefits for unionized workers, some of whom aren’t entitled to certain new benefits.

Starbucks management has argued that it’s unlawful to extend new wages or benefits to unionized workers while collective bargaining is underway—an assertion the union, and the National Labor Relations Board (NLRB), contests.

Wages, benefits may differ for unionized Starbucks workers. Starting Jan. 1, “eligible tenured partners” will see a 3% raise, while those with two to five years of service will get a 4% raise, and those with five or more years of service will get at least a 5% raise, per Starbucks.

The company said new wages and benefits “may not be unilaterally implemented” for employees at stores where union organizing is underway, and “may be subject to collective bargaining in good faith for partners in stores with certified union representation.”

Essentially, any new Starbucks benefits that were introduced after a store was unionized won’t be extended to those unionized workers until it’s in a union contract, according to a statement from the company provided to HR Brew. Some unionized workers won’t see the most recent pay raise of 5% instituted by the company, while two of the most recent perks Starbucks introduced—a benefit that will allow hourly workers to accrue paid vacation sooner, and the opportunity to compete in a national barista championship—will also be withheld from unionized employees until a contract deal is reached.

The union took issue with Starbucks’ decision to withhold benefits from some unionized workers. “Once again, Starbucks is responding to our bargaining demands, but they’re implementing them in non-union stores and denying these new benefits to workers in stores that are unionizing or already voted to join the union,” Alex Yeager, a member of SBWU, said in a statement provided to HR Brew via PR rep Daniel Massey. The union plans to file an unfair labor practice charge with the NLRB in response.

In September, the NLRB ruled Starbucks broke federal labor law when it announced benefits and wage increases for non-unionized employees last year. Starbucks has appealed this decision, arguing that unilaterally making “changes to the terms or conditions of employment for unionizing or newly unionized employees…would be an inherent threat to the integrity of the election and the bargaining process.”

Zoom out. There may be lessons for HR pros amid the legal back-and-forth over total rewards at Starbucks, Caterina Bulgarella, co-founder and managing director of Be Thread, a future of work startup, suggested on LinkedIn.

Organizations should avoid the conception that “employees will forget about unions if they are offered extra money and benefits,” she wrote.

Instead, “to manage the push toward unionization, companies should focus on developing broad-based fairness and stability strategies rather than roll out selective incentives.”