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Starbucks to add sick-leave benefits, pay increase

New benefits, spurred by tax law changes, total more than $250M

Starbucks Corp. will add a new employee and family sick-time benefit and increase wages in a program accelerated by updates to the U.S. tax law, the company said Wednesday. 

The new benefits will total more than $250 million for more than 150,000 employees, the Seattle-based coffeehouse operator said, adding that they “are accelerated by recent changes in the U.S. tax law.”

“For more than 30 years, Starbucks has continued to challenge the status quo, offering comprehensive employee compensation for our partners [i.e. employees],” said Kevin Johnson, Starbucks CEO, in a statement, citing healthcare benefits for full- and part-time workers and free tuition for a four-year degree in partnership with Arizona State University. 

The new sick-time benefits will be available to all eligible U.S. employees, which will allow them to accrue paid sick time based on hours worked and use them if they themselves or a family member needs care. 

“When this benefit goes into effect this year, sick time will accrue at a rate of one hour for every 30 hours worked, thus a partner working 23 hours a week can expect to accrue approximately five days of sick time benefit over the course of one year,” the company said. 

In January 2017, Starbucks expanded its parental leave benefits to include non-birth parents, including same-sex spouses, foster and adoptive parents. 

In addition, Starbucks said that in April all U.S. hourly and salaried workers will receive a second wage increase in addition to the annual increases that they have already received this fiscal year.

“This will include an investment of approximately $120 million in wage increases that will be allocated on regional cost of living and entry wage laws that vary from state to state,” Johnson said in a letter Wednesday to employees.

“While Starbucks already pays above the minimum wage in all states across the country, we have always felt strongly that a valuable benefits package must complement and contribute toward an industry-leading total compensation package,” he said.

On April 16, Starbucks will also give eligible full- and part-time employees, active as of Jan. 1, stock grants in a package the company valued at $100 million.

Starbucks retail employees will receive at least a $500 grant; unit-level managers will each receive a $2,000 grant; and plant and support center workers will get grants that vary based on their annualized salary. 

The company also reaffirmed its commitment to create more than 8,000 new part-time and full-time retail jobs and an additional 500 manufacturing jobs in its Augusta, Ga., soluble coffee plant. 

Starbucks said it would provide more information on the benefits changes when it reports first-quarter earnings after the market closes on Thursday.

For the fourth quarter ended Oct. 1, Starbucks generated $5.7 billion in revenue and reported earnings per share of 54 cents. Same-store sales increased 2 percent globally, the company said, including a 1-percent increase in transactions. U.S. same-store sales increased 2 percent, including a 1-percent increase in the number of customers. 

Starbucks has more than 25,000 locations around the globe.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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