More Lessons Learned from Starbucks – Don’t Be Next!
November 5, 2021
Last week three Buffalo area Starbucks were ordered by the National Labor Relations Board (the “NLRB”) to hold union elections. In its decision the NLRB ruled that each store is to vote as an independent unit- a huge win for pro-union supporters, a huge defeat for Starbucks. So, what went wrong and how can you avoid the same fate? Starbucks’ senior management was too late. They thought these stores were not at risk of unionization and they did nothing to prepare – and they were wrong.
Why QSR and Retail Owners Should Care?
The union efforts taking place in Buffalo will have major implications for Starbucks nationally, as well as Quick Serve Restaurants (“QSR”) and retailers. If these Starbucks workers ultimately unionize, they will succeed where others have failed – and will have created a road map for countless others to follow.
Brody and Associates has been sounding the alarm since well before President Biden’s election and the implementation of his pro-union agenda. We are now ringing that bell again, louder than ever. We believe the Buffalo Starbucks unionization efforts will be the flashpoint for future union efforts which will be far reaching and potentially engulf other QSR’s and retailers. Time is running out.
Failing to Prepare is Preparing to Fail
Simply put, if you are a QSR or retailer facing a union election and are not already prepared, you are in serious trouble. The strategy of waiting for an election petition to be filed before taking necessary steps to defend it, is no strategy at all!
But how to prepare? Train management on how to respond to union activity, review your policies and signage in anticipation of governmental scrutiny, talk to your employees about unions and why they are better off without one, and perhaps most importantly, determine the appropriate bargaining unit for your organization so you have the greatest chance to beat the union.
As we have written previously, the NLRB’s presumption is each store should be treated as its own separate bargaining unit; however, the NLRB may determine the unit should be more than one store. If the NLRB determines multiple stores should be combined to form the bargaining unit, this could be a benefit, as it is much harder for the union to win larger elections.
So, if larger elections are harder for the union to win, should you proactively take steps to increase the odds the NLRB will find a community of interest among all your locations? A risky move indeed, but one which could have a great payoff! Let’s look at how you could create a group of stores with a common community of interest to satisfy the NLRB standards.
The “Appropriate Bargaining Unit” and How to Tip the Scales
Before the union comes knocking on your door is the time to create the facts to support the bargaining unit that is most beneficial to you. The first step the NLRB will take after receiving an election request is to determine what the “appropriate bargaining unit” is at your stores. That is – should workers at your stores vote on a store-by-store basis or as a part of some larger group such as all your stores within a certain geographic area? To determine if all these stores share a common community of interest, the NLRB will look at a variety of factors, including, but not limited to:
- Whether your stores share employees, equipment, inventory and supplies;
- If there is a common labor policy and personnel policies among your stores;
- If there is common management among your stores; and
- If there is common ownership among your stores.
The NLRB does this analysis to determine how closely the employees interest/experience at one store are aligned with the employees in your other stores. The more closely aligned, the more likely the NLRB will determine the bargaining unit should be all these stores.
As to Item 1 above, if you want one large bargaining unit, consider flexing staff among all locations, and sharing extra equipment, inventory and supplies. If you want your stores to vote as individual bargaining units, make sure you refrain from these activities as much as possible.
As for Item 2, do you have one set of personnel policies and forms? To enhance the likelihood of one bargaining unit, make all these policies identical; to support separate bargaining units, make the policies as store specific as possible. (In many respects, this point may be more form over substance).
As for Item 3, look at the management overlap among your stores. Do you have common management between your stores? The more commonality in supervision among the stores, the more likely they will be required to vote as a single unit.
As to Item 4, commonality of ownership, some QSR and retail owners form LLC’s for each store they operate while other owners group their stores together under one corporate umbrella or a series of small umbrellas. Again, it is important to remember, the more commonality between your stores, the greater likelihood of a one bargaining unit vote.
Next, the NLRB will look at who within your stores are eligible to be unionized? Usually, the entire non-supervisory team will be the target, but who is that? The NLRB usually finds staff included and GM’s and above are not, but what about Department Managers, and/or Assistant Managers? There is no bright line. A supervisor is legally defined as someone who uses discretion to hire, fire, discipline, evaluate, and assign work. It is up to you to decide if you want to give any manager below the GM the authority to wield these powers. The more authority you give, the more likely the worker will be found a supervisor. But remember, supervisors don’t vote so with each new supervisor, you likely lost a “company” vote in the election.
Remember, before a union arrives, you can impact this calculus; after they arrive, the die is cast.
If you can create a group of stores with a community of interest to satisfy the NLRB standards, which also combines employees with pro-union and anti-union interests in such a way to thwart the outcome of a potential union election, you win! However, if you underestimate the pro-union sentiment at these locations you could risk losing big.
Also, it is important to remember there are considerations beyond unions. From a corporate liability standpoint, is a bigger unit advantageous? What about from a compliance standpoint; many laws apply to bigger businesses. By expanding your unit, are you going to increase your compliance issues? Be sure you consider all this with competent legal counsel.
An alternative strategy which is much more conservative is one where an owner silos the operations of her stores to ensure single store bargaining units. In this scenario, the owner would risk losing one store with high pro-union sentiment but protect her other stores from being enveloped into a larger unionized pool.
Before the union shows up at your door, you need to decide how best to defend yourself. You need to go beyond the TIPS and FOE strategies we have previously shared and do a deep dive into the structure of your individual operations to create the most advantageous bargaining units should a petition be filed. Perform a legal analysis to best determine how the NLRB will look at your business – consolidated or as discrete bargaining units. Are you happy with that possible outcome? If not, now is the time to restructure your operations to achieve a more favorable outcome.
Brody and Associates regularly advises its clients on all labor management issues, including union-related matters, and provides union-free training. If we can be of assistance in this area, please contact us at firstname.lastname@example.org or 203.454.0560.