Claims of “union busting” are a drag on Starbucks’ good name
by Lisa Roner, North America Editor
November 13, 2007
Starbucks finds itself in an unenviable position: being
compared to Wal-Mart in its treatment of workers. How does a perennial leader
on corporate social responsibility respond? Starbucks seems to be at a loss for
an effective answer to accusations it is a “union buster”.
The coffee house giant is having either an unfortunate or telling run of labour
rights confrontations with worker unions, particularly Industrial Workers of
the World. Starbucks recently reached a non-monetary settlement agreement with
the National Labor Relations Board over unionising efforts at a store in Grand
Rapids, Michigan, at which the
IWW says management “coercively interrogated” employees about union activities.
Starbucks has settled claims of “union busting” twice before in the past two
years. At the time of writing, it is defending itself against 32 counts of
unlawfully stifling organising activity at hearings being conducted by an
administrative law judge in New York.
IWW says the coffee giant not only squelches union activity, but also
misrepresents the generosity of the benefits it offers to workers. The union
says only 42% of Starbucks’ workers are covered by its health insurance,
putting the company in worse straits than even Wal-Mart, which insures 47% of
its workforce.
Starbucks, one of the first companies in the US
to offer comprehensive health benefits to part-time employees, says the charges
by the IWW are baseless and it has, in all cases, denied wrongdoing. While it
confirms that only 42% of its employees participate in its health insurance
plan, it says many opt out because they have coverage through another employer
or family member.
The Seattle-based company has been viewed widely as a model employer. But its
current labour troubles and approach to addressing them may spell trouble for
that responsible image.
Name games
Although the sums have been small – totalling about $165,000 – with its history
of settling labour charges to “avoid unnecessary costs”, Starbucks may, in
fact, be validating the unions’ claims against it and selling out its hard-won
reputation.
As Zac Bissonnette of bloggingstocks.com points out, with “the demographic
Starbucks appeals to … the legal costs to the company may not be material,
[but] the intangible damage could be very material”. And he warns that
Starbucks’ shareholders “will want to monitor these stories closely”. Investors
have, for a number of reasons, seen the company’s share price drop 23% in the
past year.
While Starbucks tells Ethical Corporation that it has
settled in the past to avoid “protracted litigation over relatively minor
charges” and the “unnecessary allocation of resources on both sides”, it says
it will move forward with litigation in New York
and not settle.
In trying to protect shareholders from legal costs,
Starbucks may be putting a dent in its greatest corporate asset – its good
name. If it truly is not “union busting”, the time has come to bite the
short-term financial bullet and prove it legally and in the court of public
opinion.
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