Starbucks Adds Paid Sick Leave, Expands Parental Leave for Hourly Employees

Starbucks Adds Paid Sick Leave, Expands Parental Leave for Hourly Employees

As part of a package of compensation and benefits increases, Starbucks announced on Wednesday that all of its US employees, both salaried and hourly, will be eligible for paid sick leave, while paid parental leave will now be available to all parents, the Associated Press reports:

Starbucks Corp. said Wednesday that the changes affect about 150,000 full-time, part-time, hourly and salaried employees, most of whom work as baristas or shop managers. The new benefits apply to workers at more than 8,200 company-owned stores but not at the 5,700 licensed shops like those found inside supermarkets.

The company also said workers would receive a pay raise in April, in addition to one-time stock awards ranging from $500 to $2,000. The new sick leave policy will come into effect in July, according to the AP. Previously, paid sick leave was only available to hourly employees in states that mandated it by law.

Starbucks’ parental leave policy for hourly employees has long exceeded what most US retail employers offer. Nonetheless, the coffee chain has recently faced pressure from activist investors to increase those benefits to match its substantially more generous policy for salaried corporate employees, following media reports scrutinizing the impact of this disparity on store employees. These latest changes do not equalize benefits for hourly and salaried employees, but will make parental leave available to some store employees who were not able to take it before, when it was only available to birth mothers and adoptive parents.

Starbucks attributed the changes announced on Wednesday to the tax reform bill passed by Congress last month, which slashed the US corporate tax rate, but they are also likely being driven by a tight labor market in which employers must offer more to compete for talent, even in low-wage, low-skill occupations. Reggie Borges, a Starbucks spokesman, tells Claire Cain Miller at the New York Times that the company had already been planning to add new benefits, describing the tax cut as “an accelerator” of that decision.

Walmart also augmented its parental leave policy for store employees this month. These announcements, Miller observes, are part of a trend among US employers of hourly workers, reflecting growing public awareness of the importance of parental leave to working families:

By focusing on family-friendly benefits, companies are also catching up to the fact that family life has changed faster than workplace or public policies. In families of all income levels, it’s more common for both parents to work or women to be the breadwinners, and the lack of family-friendly benefits has led to declining labor force participation as people struggle to combine work and parenthood.

Benefits like paid parental leave are a crucial factor for people, especially women, in continuing to work. Yet hourly workers, who generally have the most need for paid parental leave, have also been the least likely to get it. Only recently have more companies begun to change that.

The United States is the only industrialized country not to mandate paid parental leave. Employers choose whether and how much to offer, and this varies greatly. Of the 20 largest employers, all but one, Lowe’s, offer some form of paid parental leave. Eight of them give hourly employees less than salaried employees — in time, pay or both — including Starbucks and General Electric, according to a Times analysis.