EXCLUSIVE: Starbucks Illegally Withheld Raises & Tips from Union Workers, NLRB Says

Starbucks violated federal labor law when it excluded unionized stores from a new policy that facilitated tipping via credit card, according to a new complaint filed by the NLRB on Monday.

In May 2022, then-CEO Howard Schultz announced that the company would begin rolling out credit card tipping in the fall at all of its locations — save for the 200+ stores that were unionized or in the process of unionizing. The ability to collect tips from customers that paid with their credit cards had been a core demand of Starbucks Workers United, and Starbucks speciously argued that contract negotiations rendered it illegal for them to provide additional benefits.

When the program rolled out in September, the union filed charges with the NLRB alleging that the exclusion constituted union-busting.

Now, the labor board has backed the union, seeking to have Starbucks turn on credit card tipping at unionized stores and make thousands of workers whole for the additional wages they would have likely received through the tipping program and the raises that they were denied. In some stores, More Perfect Union has been told, credit card tipping has added $3-4 an hour on workers’ paychecks.

The NLRB’s complaint on Monday also said that the company illegally showed preference to non-unionized workers by granting them larger pay increases in December. That month, Starbucks laid out a convoluted tier wage increase system that either excluded unionized workers or granted them far smaller raises than those that worked at stores that had not organized.

Denying union workers the raises and benefits provided to workers in non-union stores has been central to Starbucks’ effort to stop more stores from organizing. When the policy went into effect in September, 230 stores had unionized in under a year. Since then the unprecedented rate of unionization has slowed.

“At my store, it did have a negative impact — we had our election finalized right as they rolled out these new benefits,” says Alisha Humphrey, a Starbucks union leader in Oklahoma City. So as happy as we were that people won, we were told that since we won our election, we were not getting credit card tipping or the raises. Our manager met with everyone and told us that if we transferred to another store, you would make $1.50 more and credit card tipping. And some did transfer.”

In August, shortly before credit card tipping was turned on for non-union stores, the labor board found that Starbucks illegally withheld raises and additional health benefits from unionized workers when it rolled out new company perks in May of 2022. The company’s top executives ordered managers to lie about why those benefits were unavailable to union workers, as revealed in a memo leaked to and published by More Perfect Union.

In September, More Perfect Union reported that Starbucks was ending its Covid isolation program and denying unionized workers participation in the additional sick days that replaced it.

“This complaint shows people that what Starbucks is doing is illegal and wrong and we will be getting back pay,” Humphrey said. “It’s not just us saying it, it’s the NLRB. That means a lot.”

Schultz, who recently stepped down early as CEO, will testify to the Senate HELP committee on Wednesday in a hearing focused on the company’s union-busting. Though he’s no longer the CEO, the NLRB’s order also would require Schultz, or another representative of the company, to read a statement of rights to the workers whose rights violated.