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Starbucks expands its paid sick leave and parental leave after tax cuts — and employee requests

Starbucks announced new benefits for workers Wednesday following the new U.S. tax law. (Ted S. Warren/AP)
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The world's largest coffee chain is adding perks for its employees in the wake of the U.S. tax cuts, announcing a wage increase and one-time bonus in the form of a stock grant, just as dozens of companies have done in recent weeks.

Yet it is also expanding paid sick leave and parental leave for many new dads, adding its name to the much smaller but growing list of companies using the recent tax cuts to expand benefits for workers. Disney said Tuesday it would be investing an initial $50 million into a tuition benefit for hourly employees, in addition to making a one-time bonus. Walmart said last week it would expand paid family leave for hourly workers. Companies like Visa and Nationwide Mutual Insurance said they would be offering higher matches in 401(k) plans. And some have expanded benefits in employees' health-care offerings.

Cutting such benefits in the future can be awkward for companies — even if simpler than trimming base pay — and could have a more lasting effect than a one-time bonus. Companies are trying to stand out among a crowded and increasingly competitive labor market by offering benefits that may pique the interest of workers or help retain them. According to 2017 Bureau of Labor Statistics data, only about 35 percent of workers in the accommodation and food services industry have access to paid sick days.

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Starbucks spokesman Reggie Borges said the company's announcement was another way Starbucks aims to build on its brand of offering benefits to workers other retail employers do not.

“Historically, we’ve shown we’re constantly thinking of ways for partners to share in our company’s success, from health care to stock grants,” he said. 

Starbucks employees, whom the company calls “partners,” can now accrue one hour of paid sick leave for every 30 hours worked, extending a benefit that previously had been offered only to those in states where the law required it. Workers may use the benefit if they or a family member gets sick, and the company said an employee working 25 hours a week could expect to accrue about five days of sick time over a year.

Borges said employees had asked for expanded sick leave benefits and the company had been contemplating the move well before the passage of the new tax law. But the tax cuts, he said, helped to “accelerate our ability to do it.” Employees had signed online petitions calling for paid sick leave and other benefits, and they had raised questions about disparities in the parental leave benefit offered to store and non-store workers.

The expansion of paid sick leave at Starbucks also fits with a trend workplace experts predicted would occur after state and local laws passed in recent years created a challenge for human resource departments at national companies. Many thought the patchwork of paid sick leave laws would lead employers to expand benefits workers receive in, say, New York and California, to simplify their processes.

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Starbucks’ announcement is evidence that may be happening. Vicki Shabo, vice president for workplace policies and strategies for the National Partnership for Women & Families, called the paid sick leave program “an extremely welcome sign” and said in an interview that Starbucks had “essentially taken what paid sick leave policies say and extended that to their entire workforce. We will be watching to make sure that what they have said they’ll do is how their partners experience it.” In a statement, the group called the new policy “very welcome corporate leadership.” 

Starbucks also announced Wednesday that it would add six weeks of paid parental leave for its hourly employees who become new dads, a benefit that had been offered only to new mothers and adoptive or foster parents. While that is an improvement from zero weeks, it is still less than the benefit Starbucks offers to its non-store employees. New mothers at Starbucks who make a salaried wage receive 18 weeks of paid leave, and other salaried parents receive 12 weeks.

The company also said it would spend $120 million on giving workers a wage increase in April and $100 million on making a stock grant to workers. Starbucks will announce its quarterly earnings on Thursday.

More companies could choose to announce new benefits for employees, taking advantage of a public relations opportunity the tax law has offered for generating headlines and attention. In recent years, creative or unique perks have increasingly become a way companies attempt to promote how they're distinct from their peers, adding benefits that go well beyond the usual health-care and retirement perks and include things such as student loan repayment or unlimited vacation. In 2016, the annual employee benefits survey by the Society for Human Resource Management tracked nearly 350 fringe benefits, up from just 60 in its first survey 20 years prior.

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