BUSINESS

Starbucks Under Fire For Giving Less Parental Leave To Hourly Workers

"This is a moral issue."

10/02/2017 07:00 EDT | Updated 10/03/2017 11:56 EDT
Bloomberg via Getty Images
A barista froths milk for a drink inside a Starbucks shop in New York. Shareholders of the company are criticizing how its employee benefits are different for hourly workers and salaried workers.

Why does Starbucks think it’s OK to give its well-compensated salaried employees far better paid leave benefits than hourly workers who are already barely scraping by? On Monday, some of the company’s shareholders filed a resolution demanding an explanation.

At issue is a new Starbucks maternity and paternity leave policy that went into effect over the weekend. The coffee giant now gives salaried workers ― some of whom make six-figure salaries ― 18 paid weeks off for maternity leave. Hourly workers, who earn around $10 an hour, get six weeks paid time off if they physically give birth to a baby. Hourly workers who adopt also get six weeks off fully paid. Men who work hourly and whose partners give birth get 12 weeks off without pay; men and adoptive parents who work in corporate also get 12 weeks, but fully paid.

Adoptive parents and men who work hourly get 12 weeks off without pay; men and adoptive parents who work in corporate get the same amount of time, but fully paid. The company has around 180,000 U.S. employees and the vast majority work in the stores, meaning the generous leave policy effectively goes to only a privileged minority.

“This is a discrimination claim just waiting to happen,” said Pat Miguel Tomaino, associate director of socially responsible investing at Zevin Asset Management in Boston, the lead filer on the shareholder resolution, with four other social impact investors including Reynders McVeigh Capital Management, Arjuna Capital, Pax World Management and Friends Fiduciary Corporation.

Not only is Starbucks’ reputation as a progressive company at risk, Tomaino said: “It’s a moral issue.”

In an email, Starbucks spokesperson Jaime Riley emphasized the company offers extremely generous benefits to hourly employees who work 20 hours or more a week including health care, a stock plan, free college tuition and 401(k) matching. The company’s parental leave benefits are “exceptional” in the retail industry, Riley said.

Indeed, only 14 percent of private sector employers have access to paid parental leave.

When HuffPost asked how Starbucks squared the inequality between hourly worker and corporate parental benefits, Riley said, “That’s an interesting phrasing of that question.” She added that the company takes “a competitive approach and provide[s] benefits based on what our partners express as their needs and preferences.”

Jess Svabinek, a 38-year-old barista at a Starbucks about 40 miles away from Seattle who makes $11.05 an hour, is out on unpaid leave now with her baby boy and certainly would have preferred more paid time off.

“I can’t even grasp having to go back to work after just six weeks,” she told HuffPost. “I’m nine weeks out from a C-section and I couldn’t imagine getting up at 2 in the morning for the morning shift and leaving the baby. That’s when we’re up nursing.”

Courtesy Jess Svabinek
Jess Svabinek, a Starbucks employee, with her husband and newborn baby.

Svabinek, who had her baby before the new policy went into effect, was able to take 8 weeks off at 67 percent of her regular pay. She is relying on her husband, who makes $20 an hour at Trader Joe’s, to get by on leave for as long as possible.

She figures she’ll be back to work in January, if she can swing it financially. Already, her husband has put off some much-needed dental work to make everything possible.

Starbucks is hardly the only retailer to offer better benefits to higher paid workers. Walmart gives women in its corporate office 12 weeks of paid maternity leave while its hourly workers get none, according to data compiled by Paid Leave U.S., a nonprofit advocacy group that also worked on Monday’s Starbucks proposal. Yum Brands, Taco Bell’s parent company, only gives paid leave to corporate full-timers; not to workers in its fast food restaurants. Other companies, including Ikea and Bank of America, provide equal benefits to all workers. 

It’s hard to seriously claim that a baby deserves less time with his mom because she couldn’t get a fancy white-collar job.

This kind of class-based discrimination is baked into how companies do business, paying different workers different salaries based on their desirability. No one would argue that there’s anything wrong with those salary differences.

But the issue of paid leave is trickier. It’s hard to seriously claim that a baby deserves less time with his mom because she couldn’t get a fancy white-collar job.

And the issue isn’t really one the private sector is ever going to solve on its own. The problem is the United States has left what is essentially a public policy issue in the hands of private companies that are accustomed to doling out unequal benefits to workers.

The Starbucks shareholder proposal emphasizes that these corporate paid leave policies are significant because the United States is one of only a handful of countries in the world without any paid maternity leave policy, placing companies like Starbucks at the center of a critical national policy issue.

Yet the shareholders aren’t looking to start some crazy revolution. The resolution asks that Starbucks’ board look into the paid leave disparity and produce a report evaluating the discrimination risks that might arise.

Tomaino wouldn’t say how he’d like Starbucks’ policy to change. “It’s not our role to be prescriptive,” he said, adding that he’d just like the company to re-evaluate the policy with an eye toward fairness, employee morale and the risks of lawsuits.

The investor groups say Starbucks’ leave policy is particularly disturbing because over the years the company has developed a reputation for treating its workers well and providing equal benefits to all employees.  

Starbucks was also an early supporter of gay marriage, yet LGBTQ hourly workers are particularly hurt by the lack of paid leave for adoptive parents. Those workers are far more likely than their straight counterparts to adopt or foster children.

Activist investors have increasingly been pushing companies on social issues, most recently urging companies to report on gender and pay, with some success ― convincing a handful of major tech companies to make public information on their pay gaps.

“Investors now are stepping forward,” said Tomaino, who hopes to replicate those successes when it comes to paid leave.

The Starbucks resolution is the first of its kind, but expect more. Tomaino said his organization is also talking to 11 other major retailers, including Target, Amazon, Costco and Apple about their paid leave policies ― or lack thereof.

The group is looking at the issue of unequal benefits, as well as cases in which the amount of leave offered is simply inadequate.

Without paid leave, many women are forced out of the job market. Others are set back in their career paths, by taking less-demanding jobs, declining promotions or dropping back to part-time work with the arrival of a child. That means many parents wind up tapping public benefits like food stamps to get by when a baby arrives on the scene.

The lack of paid leave is one major reason women in 2017 still make just 80 percent of what men earn on average, according to federal data, and that the U.S. lags other developed countries when it comes to the percentage of women in the labor force. 

CORRECTION: A previous version of this story said Starbucks did not offer paid leave to hourly workers who adopt children. In fact, the company provides them with six paid weeks off.