The labor troubles brewing for Starbucks in New York are spreading to another state, putting the company's worker-friendly image on trial.
On Sept. 20, the National Labor Relations Board accused the coffee chain of unlawful anti-union activity at a store in Grand Rapids, Mich., the second time in recent months that the government organization has leveled such charges against Starbucks (SBUX). The company meanwhile continues a months-long trial in New York, facing charges that it unfairly suppressed organizing efforts by the Industrial Workers of the World (IWW).
The union claims Starbucks' tactics in Michigan have been similar to those in New York, where the company faces 32 counts of unlawfully stifling organizing activity. The IWW says that at a Starbucks located on Wealthy Street in Grand Rapids, Starbucks threatened to terminate a worker for union activity and denied union members access to the store bulletin board.
"The Labor Board investigation has confirmed what baristas here already knew," says Cole Dorsey, 26, an IWW member and Starbucks barista in Grand Rapids, who says he was unfairly threatened with termination. "When Starbucks employees organize to have their contribution to the company recognized, corporate responds with an ugly union-busting campaign."
Company Spokesman Denies Charges
Starbucks says the union's charges are without foundation. "Starbucks respects the free choice of our partners and strictly complies with the laws and guidelines associated with labor organizing activities," wrote Starbucks spokesman Brandon Borrman in an e-mail message. "Starbucks is recognized as a best place to work because we have made treating our partners with respect and dignity our number one guiding principle."
"It is unfortunate that a small group of individuals calling itself the Starbucks Workers Union continues to misrepresent itself as an advocate for our more than 140,000 partners worldwide by filing unwarranted charges," Borrman added. Starbucks has until Sept. 28 to decide whether to settle the Michigan case or proceed to a Labor Board trial before an administrative judge, similar to the ongoing hearing in New York.
"We have advised the employer that there is enough evidence to establish a violation," says Stephen Glasser, director of the NLRB in Region 7, which includes Detroit and surrounding areas. "We are seeing if they are willing to settle the matter before a formal complaint is issued." Glasser declined to discuss the details of the charges before Starbucks' official response.
Unfavorable Comparisons with Wal-Mart
While the union tries to gain members store by store, its overall mission is much broader. Organizers are raising questions about Starbucks' reputation as a pro-employee company and arguing that it's another example of a low-wage service sector employer with inadequate benefits. The union points out that only 42% of Starbucks "partners," or employees, are covered by the company's health insurance, a figure the company confirms, even less than the 47% at Wal-Mart Stores (WMT). "This trial is putting corporate social responsibility itself on trial," says Daniel Gross, a former barista involved in the New York NLRB case. "If it's fake at Starbucks, it's very likely fake in general."
The IWW launched a national organizing campaign (BusinessWeek.com, 8/1/07) at Starbucks in 2004. The union says it has members in four states but will not disclose the number of Starbucks workers who are members.
More Legal Trouble
It's been a tough week for Starbucks on the legal front. The day after the NLRB's findings in Michigan, a federal court decided to deny Starbucks' motion to defeat a class action by managers seeking overtime (BusinessWeek, 10/1/07). In the suit, 900 Starbucks store managers argue they perform similar tasks to baristas and should be eligible for overtime. A ruling in the managers' favor could cost Starbucks tens of millions of dollars in unpaid overtime wages, damages, and attorney fees.
In addition to the federal court decision involving managers and the Sept. 20 NLRB decision, NLRB Region 7 is continuing to investigate whether Starbucks violated its 2006 settlement obligations involving other anti-union conduct in Grand Rapids. The IWW alleges the company failed to change its employee handbooks to indicate workers are free to wear union buttons and distribute union literature on the job.