After several decades spent rising to the top of the coffee shop food chain, Starbucks (SBUX) is currently grappling with some existential questions.
The Seattle-based coffee giant is seeing more and more employees push for unionization, and the company's attempts to ward it off have spiraled into a PR crisis.
As mobilization efforts and calls for other changes to employee structure started gathering steam last fall, Starbucks announced that it would be raising the wage of all its American employees to $15 per hour by the summer of 2022.
During its most recent earnings call, Starbucks CEO Howard Schultz announced that the company will also invest an additional $200 million into its workforce and increase wages at its stores further.
But Schultz said that the price hikes will only apply to Starbucks locations that have not unionized.
Since the first Starbucks location in Buffalo, N.Y. voted to unionize in December, that number has grown to nearly 50 stores across the country.
Employees still routinely bring up understaffing, faulty equipment and underpayment despite record Starbucks sales of $29 billion in 2021.
Salary Hikes For Non-Union Stores Only?
"Today, we take further steps to modernize our pay and benefits vision for our partners with further investments in wage and [...] in September, we will share additional initiatives we are planning for Starbucks partners," Schultz said during the May 3 call.
On top of the promised $15 an hour, this would include a 5% increases for workers with two to five years of experience and a 7% raise with those who have been working at Starbucks for more than five years.
The raises, benefits and other enhancements promised by the company will not apply to Starbucks locations that have a union or that are in the process of forming one.
Schultz said that is because there is a federal law that prevents companies from making either good and bad changes to its pay structure without negotiating directly with the union.
"Federal law prohibits us from promising new wages and benefits at stores involved in union organizing," Schultz said during the investor call. "And by law, we cannot implement unilateral changes at stores that have a union."
Legal Experts Disagree on Schultz's Rationale
But legal law experts have questioned this claim and asked whether phrasing salary hikes as a guarantee for non-unionized employees is the equivalent of pressuring employees to forgo mobilization.
"If Starbucks said, 'Drop the union campaign and you'll get this wage increase and better benefits,' that'd clearly be illegal," Matthew Bodie, a labor law professor at St. Louis University, told the New York Times. "Hard to see how this is that much different in practice."
Bodie argued that Starbucks could be negotiating in bad faith if it is signaling that workers who unionize will get a worse deal than those who do not.
“They’d have to at least offer this package to the union,” Bodie said.
Negotiating 'In Good Faith'?
While there are currently over 8,800 Starbucks locations across the U.S., over 200 are in the process of filing petitions with the National Labor Relations Board.
Starbucks said that it would "negotiate in good faith" with stores that are choosing to be represented by the union.
"Starbucks will not favor of discriminate any partner based on union issues, and we will respect the right of Starbucks partners to make their own decisions when exercising these rights," Schultz said in the same earnings call.
That said, a growing number of employees are accusing Starbucks of union-busting and handing out material that highlights what employees will lose if they choose to form a union.
The union representing the workers, Starbucks Workers United, recently claimed that Schultz's comments about the company's improved benefits plan violated the National Labor Relations Act and was the equivalent of threats.
"Starbucks, like all employers who are faced with emerging unions, will try to make concessions of various kinds on wages and other issues all in order to avoid dealing with workers collectively," Joseph McCartin, a history professor and executive director of the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University, told TheStreet in April.
