Feds allege Starbucks withheld benefits to 'discourage' Clarksville, other states' union workers

Federal officials accused Starbucks of labor law violations in a complaint last week.

A store in Clarksville became Indiana’s first, and so far only, Starbucks location to vote for unionization in late July.

In the 30-page complaint, obtained through a Freedom of Information Act Request, National Labor Relations Board Seattle regional office officials allege the company withheld benefits from the Clarksville store and 261 other locations that had voted to unionize or were considering it across the country. The benefits included faster sick time accrual and enhanced opportunities to gain tips.

For 175 of those stores, the company also withheld a pay raise that it gave non-union stores around Aug. 1. Likely because of the timing of their unionization, the Clarksville location was not among those that had the increase withheld.

The company did that, the complaint claims, in direct response to those stores' unionization efforts and also potentially to “discourage” others from unionizing.

Kathy Hanshew is the midwest manager for Workers United, the union representing Starbucks workers in Clarksville and the region. She is also the union’s international vice president. In an interview, she said the company withholding these wages and benefits did seem to have a chilling effect on unionization efforts in the region’s other Starbucks stores.

“And we've kind of come out the other side now, with this [complaint], we've seen an uptick in those unionization efforts and more incoming from stores and folks looking to see how they can unionize,” she said.

In a statement, a Starbucks spokesperson said the company was just following federal law. They claim the benefits and wage increases were only immediately given to non-union locations because federal law requires those things to be negotiated as part of a collective bargaining process.

READ MORE: A Clarksville Starbucks could become first in Indiana to unionize with Workers United

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In previous public statements, the company has repeatedly said it is following federal labor laws around collective bargaining and accused NLRB officials of wrongdoing. On Aug. 18, a judge required Starbucks to reinstate seven employees from Memphis, finding the company fired them for their union activities, according to the AP.

“Starbucks is running a pretty ugly, anti-union campaign. And these workers are facing a lot of fear and intimidation,” said Hanshew. “[The NLRB complaint] gives them the strength to continue with their fight for dignity and respect in the workplace and it validates their efforts. And then I think, secondly, it sends a message to employers and companies out there, that these tactics that they're using, they're not going to go unchallenged, and that they will be held accountable for their actions.”

To resolve the complaint, officials want Starbucks CEO Howard Shultz to record a video explaining labor rights to workers, send apology letters and pay lost wages to affected workers among other remedies.

An administrative judge will hear the case in late October. The company could appeal that decision and go to a full board hearing after. Or it could resolve the matter by settling with the NLRB Seattle office directly at any point.

Hanshew is not confident the video and apology letter will remain on the table as the process goes on. Kenneth Dau-Schmidt, Indiana University Margaret Carr professor of labor and employment law, isn’t sure, but he said the “unique” remedies may not be “uncalled for.”

“The typical remedy here is to post a notice [of rights] that the employees can see,” he said. “But sometimes, if you have a ... employer who intentionally violates the law, and they get caught, and they post a notice that says, ‘I violated the law, I won't do it again.’ And then they get caught again. And they have to post another notice that says, ‘I violated the law, I won't do it again.’ At some point, once they get up to three or four or five of these notices, they begin to undermine the purpose of the notice.”

The proposed remedy is not the only unique thing about this complaint, Dau-Schmidt said. It’s “uncommon” for the NLRB to become so active in a union dispute this early in the process. The fact that they are involved means the region’s counsel believes they’ve got a “reasonable probability” of successfully proving Starbucks violated the National Labor Relations Act and may be signaling a desire to enforce the act more strongly.

Dau-Schmidt said a ruling against Starbucks may give employees “reassurance that the law is going to be enforced and that if they want to organize, they can't be they can't be discriminated against by the employer, at least if they do, there will be a remedy with the board.”

“I would think it would give them hope and courage,” he said.

Contact reporter Adam at arayes@wvpe.org or follow him on Twitter at @arayesIPB.

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