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The company that brews one of the tastiest coffees in the world is facing legal wrath these days. Starbucks is accused of violating labour laws amid workers' demand for a Union. Michael A. Rosas, the National Labor Relations Board judge, announced Starbucks guilty in a court hearing in March.
Following the incident, Starbucks fired the shift organizer, Alexis Rizzo, who ignited labour unions in the first place, and now the battle is on. Employees are in a rage, and the company is facing legal repercussions.
And the fuming tensions between the company and its workers bring forth a very concerning question: Why does Starbucks hate unions to the extent of falling into a legal debacle to stop unionization?
In this case study, we will find answers to this question.
Starbucks was founded in 1971 with a small retail store of coffee beans and spices. Today, after over 50 years, the company is at the forefront of the global coffee house market, amassing revenue in billions.
The company was initially founded by three college friends- Gordon Bowker, Jerry Baldwin, and Zev Siegl in 1971. Starbucks began its journey by selling high-quality coffee beans, spices, and equipment in Seattle’s 2000 Western Avenue. The trio sold roasted coffee for the next five years and began selling espresso in 1986.
At that time, one of the employees of Starbucks, Howard Schultz, saw the opportunity to buy the business and became the new owner of Starbucks in 1987.
After that, there was no going back. After that day, the company only marked exponential growth. In just a year, the company had more than 46 stores, and in the next five years, the numbers jumped to more than 135 outlets in 1992, earning yearly revenue of $72 Million.
The same year, the company also made it to Initial Public Offering on the NASDAQ Stock Exchange.
Today the company bags yearly revenue of more than $26 Billion.
The company is ahead of its competitors. However, the closest threat to Starbucks is Tim Hortons ($2.63 Billion Revenue) and Dunkin’ ($1.4 Billion revenue). Regarding the number of stores, MacDonald's is Starbucks' primary competitor.
Starbucks is facing allegations of “unjust treatment” from its employees. Since the pandemic, employees in the US have been struggling to build a union. And Starbucks is accused of dismissing the efforts to unionize to the extent of firing the key employee in union formation demands.
The employees of Starbucks in the United States wish to form a worker’s union. The demands of employees are simple- form a union and negotiate a fair contract with the company.
Since last year, Starbucks workers have united, working daily to unite the employees. A union is a joint body of employees that guards employees’ rights in a workplace. Hence, the employees could collectively put forth their demands with a union.
No contract, no coffee movement has been started by Starbucks Workers United- around the US, urging Starbucks to fix a contract with its employees, ensuring job security.
Other than job security, the following are some of the demands presented by the Starbucks workers united.
The demand for Union ignited around 18 months back when Alexis Rizzo, a former employee at the Genesee St. store in Buffalo, New York, voted to unionize. Following suit, more than 350 Starbucks stores around the US voted in favour of union formation.
The trend of forming a union has recently caught up in the Buffalo area of the US, where many firm employees, including the EV giant Tesla and Amazon, are gaining momentum for Union formation.
In March 2020, JFK8- Amazon’s largest fulfilment centre, voted to unionize. In February 2023, workers of Tesla also voted in favour of Union Formation.
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The coffee giant is accused of curbing the unionization efforts of the employees.
The company illegally monitored and fired employees participating in the unions, and introduced monetary benefits and wage hikes to lure employees away from labour formation, the judge outlined at the court hearing.
Not only this but Starbucks is also accused of adding additional staff at the coffee houses to dilute union favouritism.
And since a union formation leads to better wages and improved working conditions for employees, most employers retaliate against the idea of a union on economic grounds. The same is the case with Starbucks.
Over the years, Starbucks has established itself as one of the most employee-friendly organizations, giving wage hikes three times a year and making its employees brand ambassadors.
But at the same time, employees are agitated, posing a serious question: is it all a for-show business?
On the contrary, the company’s business has been booming in the past year, posing an opportunity to open 100 new stores in UK by the end of this year.
So, at the bottom line, the question remains- are employees above the economic benefits?
As mentioned above, Amazon faced unionization during the pandemic when there were little to no safety products available for Amazon’s workers. Chris Smalls, now the Labor Union of Amazon (ALU) president, initiated the movement in March 2020. Initially, the aim was to feed fired employees and provide safety equipment for workers in Amazon’s largest warehouse facility- JFK8.
On April 1st 2022, an official ballot was organized to vote for the unionization of JFK warehouse, following which an official union- ALU- came into existence.
Observing how Amazon handled the situation, Starbucks can note down a few points to avoid legal troubles in the future.
Starbucks is the leading global supplier of coffee. But it has been possible due to the gruelling efforts of hundreds of thousands of employees serving every customer with utmost care and priority.
However, no brand is anything without its employees. So Starbucks should give its employees a fair chance to put forward their needs to reach a mutual consensus.
In essence, it is high time Starbucks put its house in order.
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