Last autumn, the Boston-based investment firm Zevin Asset Management led a investor push at Starbucks to pressure the coffee chain into expanding its parental leave benefits for hourly store employees to match the more generous policy available to salaried corporate employees. In a shareholder resolution, Zevin requested that Starbucks’ leadership tell its investors whether this discrepancy might constitute employment discrimination.
In January, Starbucks announced that it was expanding its parental leave benefits, as well as adding paid sick leave, for hourly employees. While the changes do not equalize the offerings for salaried and hourly employees, they will make parental leave available to many store employees who were not able to take it before. Zevin considered that a victory, and they and other activist investors have since been pushing for similar changes at other large US employers, Rebecca Gale reports at Slate:
The Starbucks shareholder resolution on paid family leave was the first of its kind, and it has proven so effective that socially responsible investing firms such as Zevin are gearing up to put more shareholder resolutions in place for companies that have unequal paid leave policies, citing the need for what they call “better human capital management,” i.e. better meeting the needs of workers, which they think will yield better long-term results for the companies. And Zevin has the close-knit group of socially responsible investment firms in Boston that regularly meet to learn about issues and connect on ideas to make it happen.
The major home improvement and appliance retail chain Lowe’s announced in a press release last Thursday that it was introducing a paid parental leave benefit for full-time employees, both salaried and hourly, as well as expanding eligibility for its health insurance plan:
In addition to the company’s comprehensive benefits program, eligible full-time hourly and salaried U.S. employees will qualify to receive:
- Ten weeks of paid maternity leave and two weeks of paid parental leave.
- An adoption assistance benefit to cover up to $5,000 of expenses related to agency, legal and other fees.
- Eligibility to enroll in health benefits sooner, as early as the first of the month following 30 days of service.
Lowe’s also announced one-time cash bonuses of up to $1,000 for its more than 260,000 hourly employees, as some other large US employers have done in response to the substantial cut in the corporate tax rate passed by Congress in December.
The chain’s new leave policy, which goes into effect May 1, means that the 20 largest private employers in the US now offer some form of paid parental leave benefit, the New York Times‘ Claire Cain Miller observes:
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.
Walmart, the world’s largest private employer, announced on Thursday that it was raising its starting hourly wage from $9 to $11 per hour, introducing a more generous parental leave policy, and offering one-time cash bonuses based on length of service for its US workforce. CEO Doug McMillon revealed the changes in a note to employees:
[W]e’re raising our starting wage to $11 an hour for Walmart U.S., Sam’s Club, Supply Chain, eCommerce and Home Office hourly associates effective in February. We’re also providing a one-time bonus to hourly associates that pays a larger amount the longer you’ve been with our company. Associates that don’t benefit from the new starting wage increase are eligible for the bonus and it will range from $200 to $1,000 depending on your length of service. …
I’m also excited to tell you that we’re making an important change to benefits by expanding our paid leave policy to provide full-time hourly associates with 10 weeks of paid maternity leave and six weeks of paid parental leave. This expanded parental leave also applies to salaried associates and to parents who adopt. We will also contribute $5,000 to the cost of adoption.
McMillon cited the corporate tax cut passed by the US Congress in December as part of what prompted the company’s decision. Several other major US employers, including AT&T, Wells Fargo, and Boeing, have also announced plans to invest part of their tax savings in raises or bonuses, though most companies have said these savings will mainly be spent on debt repayment, dividends, and stock buybacks.
Since Walmart began a push to raise wages for its legion of store employees last year, leaders at the big box chain have attributed its solid performance to the greater investment they were making in their staff. And because Walmart is such an enormous actor in the US economy, its choices have ripple effects in the retail sector. Over at Quartz, Oliver Staley argues that while some see the company’s size as being a “malign force,” that doesn’t take into account how Walmart’s choices can be also be beneficial:
The company also has used its massive buying power to eliminate waste in packaged goods and to drive down the cost of energy-efficient light bulbs, speeding their widespread adoption. Raising wages can have an even bigger impact. Walmart employs one in 10 US retail workers, and one out of every 100 US private-sector employees. Just as the company forced competitors to hold the line on wages, increasing its pay is now pressuring rivals to match it.
Walmart also raised salaries for entry-level managers in response to the Obama administration’s now-defunct overtime rule last year, but at the bottom of the pay scale, seemingly small increases, say from $10 to $11 an hour, can make a big difference in the lives of the working poor. Walmart is such a huge employer, Staley points out, that its pay practices effectively set a benchmark for the rest of the retail industry, pressuring other retail giants like Target to commit to adopting a $15 minimum wage by 2020:
Screenshots of the Legion IOS App
In sectors like food service and retail, where front-line employees work hourly and customer traffic is highly variable, the conflict between businesses’ need for flexible staffing and employees’ desire for predictable hours and incomes has led to increased labor activism and efforts to regulate variable scheduling. Even though most employees with variable schedules don’t have a problem with them, they can be a hardship for low-income employees struggling to make ends meet, or parents trying to schedule around the needs of their children. The controversy has led to some major retailers dropping the practice of “on-call” scheduling.
Fortunately, a growing number of technological solutions are coming to market to help organizations set and communicate schedules in ways that are more predictable and less disruptive to their employees. The latest of these is a startup called Legion, which recently raised $10.5 million in funding for its platform. Founder Sanish Mondkar tells TechCrunch’s Matthew Lynley that he hopes to use big data to crack the challenge of intelligent scheduling once and for all:
The startup uses large amounts of data, all the way down to the weather near a store, to try to predict how busy it will be and how to intelligently staff that store and prepare for the foot traffic. It also works to sort out the best possible schedule for each employee, whether they want to work a regular shift at the same hours or vary from week to week and trade shifts a lot. The company is rolling out with Philz, one of Silicon Valley’s favorite coffee projects, to try to prove out such a concept. …
Starbucks has a reputation for taking good care of its store employees (or “partners” as it likes to call them), but it has nonetheless drawn some controversy this year regarding its paid parental leave program. Under a new policy announced earlier this year, new mothers who work at the coffee chain’s corporate offices are entitled to as much as 18 weeks of leave at full pay after giving birth, while fathers and adoptive parents get 12 weeks. Store employees working more than 20 hours a week and who have been with the company more than 90 days are allowed six weeks of paid medical leave upon giving birth, while those who adopt are eligible for a six-week adoption allowance, both at 100 percent of their average weekly pay.
Even though these benefits are much better than what most hourly retail and service employees in the US enjoy, the policy raised questions about why corporate employees were entitled to so much more. In August, the Guardian’s Molly Redden highlighted the impact of this disparity on store employees, noting that Starbucks is not alone among major US companies in offering more generous parental leave benefits to their corporate employees than to their front-line staff. Now, Redden reports, a group of investors led by Zevin Asset Management is pressuring Starbucks to tell its shareholders whether this discrepancy might constitute employment discrimination:
“Paid family leave is a huge factor in how well women can stay involved in the workforce after having a baby, or how much time out they have to take in their careers,” said Pat Tomaino, Zevin’s associate director of socially responsible investing. “Women and their families benefit from equal and generous paid family leave – but companies do too.”