How a Recent Starbucks Case Could Strengthen Teamsters’ Ability to Collectively Bargain with Costco

by Casey Semple, Associate Member, University of Cincinnati Law Review Vol. 93

I. Introduction

Since the peak of American labor unions in the 1950s, when unions comprised one-third of the workforce, union membership and public opinion on labor unions have steadily declined.[1] At the height of the Great Recession in 2009, only 48 percent of the American public held favorable views of unions—the lowest approval rating unions have experienced and the first time labor unions did not hold the majority of public support.[2] Over the past decade, however, public attitude toward organized labor has proliferated, climbing more than 20 percentage points up to 70 percent in 2024, marking one of the most rapid changes in public opinion regarding labor unions in American history.[3] Despite the recent rising popularity of organized labor, unions remain constrained by past unfriendly legal decisions.[4] However, this has not stopped labor unions from asserting their own more labor-friendly legal frameworks, allowing courts to see specific issues in a new light.

Such an argument was made in the National Labor Relations Board (“NLRB”) decision Starbucks Corp. for actions taken by Starbucks Corporation (“Starbucks”) during negotiations with Workers United Labor Union International (“Workers United”).[5] This article dives into the argument that an employer cannot raise wages of non-union employees when in contract negotiations with union workers, and it explores how the argument could also be applied to recent actions taken by Costco Wholesale Corporation (“Costco”) during negotiations with the International Brotherhood of Teamsters (“Teamsters”). Part II examines the Costco and Teamsters relationship when negotiating a contract, as well as Starbucks’s actions in similar circumstances during contract negotiations with United Workers. Part III explains how the Starbucks litigation could lead to Teamsters prevailing in a lawsuit against Costco under the NLRB. Finally, Part IV discusses the room for improvement that exists concerning the protection of labor unions’ ability to negotiate contracts.

II. Background

The Teamsters, the largest union in the United States, organizes professional and non-professional workers who want to bargain collectively with their employers in both the private and public sectors.[6] The Teamsters’ 1.3 million members are comprised of a wide spectrum of diverse workers including public defenders in Minnesota, vegetable workers in California, sanitation workers in New York, newspaper workers in Seattle, construction workers in Las Vegas, health care workers in Rhode Island, bakery workers in Maine, and many more.[7] The Costco workers comprise one such group of workers.[8]

Costco was founded in the 1980s in Seattle, Washington and quickly became known for offering competitive pay and benefits to its employees compared to what other retailers offer.[9] The Teamsters began representing Costco employees in the 1980s, and by the late 1980s and early 1990s, Teamsters expanded to multiple Costco locations.[10] Today, the Teamsters union represents over one thousand Costco workers across the United States and is party to several collective bargaining agreements with Costco.[11]

A. Raises at Costco

One such collective bargaining agreement is the Costco Teamsters National Master Agreement (“CTNMA”), which covered more than 18,000 Costco workers and was effective from February 2022 until January 2025.[12] As the contract neared its expiration, Costco and Teamsters’ bargaining representatives spent weeks negotiating but could not reach an agreement.[13] Some of Costco’s sticking points that were holding up the agreement were Teamsters-backed proposals on improved seniority pay, paid family leave, bereavement policies, sick time, and safeguards against surveillance.[14] Unable to resolve their differences, on January 20, 2025, Teamsters voted by an 85 percent margin to authorize a strike effective January 31, 2025, the expiration date of the CTNMA.[15] The director of the Teamsters Warehouse Divisions, Tom Erickson, described the vote authorizing a strike as a “direct response to Costco’s greed and blatant disregard for the bargaining process.[16] Along these lines, Teamsters members expressed their belief that Costco’s offers demonstrated a refusal to bargain constructively and to present a fair contract reflecting the company’s record-breaking profits.[17] Notwithstanding the strike vote, the parties continued bargaining, and on February 1, 2025, the Teamsters announced that they had reached a tentative agreement for a new contract subject to a union-member vote.[18]

During these negotiations, but before the tentative agreement was reached, Costco announced that all hourly, non-union employees would receive a pay raise and improved benefits.[19] The non-union employees at the top of Costco’s pay scale would receive a $1 per hour raise, increasing pay to $30.20 per hour, and an additional $1 per hour raise each of the following two years; the non-union employees at the lower end of the pay scale would receive a $0.50 per hour raise, raising the starting pay to $20 per hour.[20] Teamsters Communications Project Manager, Matthew McQuaid, explained that the union was pleased these workers would be receiving wage increases but explained that “it was the [Teamster]’s pressure that led to the increase.”[21] Costco declined to comment.[22]

B. Raises at Starbucks

Over the past several years, Starbucks has experienced a wave of union organizing at its stores across the country, resulting in many Starbucks workers joining Workers United to bargain collectively with Starbucks.[23] In October 2021, just a few months after the first Starbucks stores unionized in Buffalo, New York, Starbucks’s CEO announced that Starbucks would be raising wages to at least $15 per hour and would begin providing benefits, such as credit card tipping, increased training, and faster sick time accrual to all stores that were not unionized or amid an organizing drive.[24] These wage increases and expanded benefits, set to start in August of 2022, diverged from Starbucks’s typical practice of implementing annual mid-January wage increases.[25] Between the announcement and implementation of the increased wages and benefits, union drives accelerated in Starbucks stores.[26] By April 2022, hundreds of union-organizing drives and union-representation-election victories transpired across the country despite Starbucks’s best efforts to campaign against organized labor.[27] As part of this campaign, Starbucks explained to workers that these increased wages and benefits would apply only to non-union employees.[28] Similarly, Starbucks explained that it could not promise new wages or benefits for stores in the process of unionizing.[29]

Indeed, the NLRB has long held that an employer may not unilaterally change the terms or conditions of employment for unionized employees and that an employer also may not make such changes during a pre-election period.[30] Therefore, when Starbucks implemented these changes at the non-union, non-organizing Starbucks stores, Workers United filed unfair labor practice charges regarding Starbucks’s actions.[31] NLRB General Counsel, Jennifer Abruzzo, filed a complaint alleging that Starbucks violated the National Labor Relations Act (“NLRA”) by increasing wages and benefits to non-union stores while withholding the same increases from stores that had unionized.[32]

Assessing whether an employer has violated the NLRA by increasing wages for non-union employees is typically done under the NLRB’s 1948 precedent, Shell Oil Co., Inc.[33] There, the NLRB held that “absent an unlawful motive, an employer is privileged to give wage increases to [its] unorganized employees, at a time when [its] other employees are seeking to bargain collectively through a statutory representative.”[34] Similarly, an employer is under no obligation to give wage increases to union members “in the face of collective bargaining negotiations on their behalf involving much higher stakes.”[35]

After Shell Oil, issued over 75 years ago, the NLRB has increasingly focused on the “absent unlawful motive” factor when assessing the lawfulness of the differential treatment between non-union employees and unionized/organizing workers.[36] The NLRB utilizes a burden-shifting standard to determine the employer’s motive and whether it was acting with “union animus,” as explained in the NLRB decision Wright Line.[37] Once the NLRB General Counsel has demonstrated that the employer was acting with “union animus,” the burden shifts to the employer to demonstrate it would have taken the same actions, absent and independent of the employee’s organizing-related actions.[38]

In Starbucks, General Counsel Abruzzo asserted in the complaint that Starbucks had an unlawful motive when it discriminated against union workers by giving increased wages and benefits to non-union employees, and this unlawful motive contaminated Starbucks’s right to change the terms of employment for non-employees.[39] Abruzzo also advocated that the NLRB should overturn Shell Oil.[40] The General Counsel’s proposed inherently-destructive standard would essentially require an employer to extend any offer of new benefits to union workers or those workers in an organizing drive.[41]

An NLRB administrative law judge agreed with Abruzzo’s argument that Starbucks’s motive for increasing wages and benefits was to interfere with the labor organizing drive at their stores.[42] Applying the Wright Line standard, the judge determined that the legitimate business justifications Starbucks put forth were merely a pretext for discrimination.[43] The judge explained that if Starbucks had wanted to give the unionized workers the same raises and benefits, Starbucks was more than capable of asking the union for permission to do so, avoiding the unlawful unilateral change of terms of employment of unionized workers.[44] The judge also highlighted that how Starbucks disseminated the message regarding increased wages and benefits showed that its motives were unlawful. For example, Starbucks’s officials’ statements compared union benefits to the benefits offered to non-union employees and the timing of the increased wages and benefits.[45] By making comparisons of the non-union employees’ benefits and the union workers’ benefits in the announcement, Starbucks demonstrated the motive behind the increased wages and benefits to non-union employees was for such comparisons to be made in the minds of their employees, hoping their offer would appear more attractive than what the union could offer.[46] The judge could find no evidence “that either market forces or sheer altruism motivated [Starbucks] to disrupt its already-disrupted normal pattern of wage increases to reward its non-union partners.”[47] However, the judge did not go so far as to rule that Starbucks and other employers had a legal obligation to offer the same increases to union employees.[48] The judge recommended monetary compensation for all losses and any direct or foreseeable pecuniary harms, citing the Board’s recent expanded remedies, in Thryv Inc., under which employees are entitled to a wide range of remedies when their employers violated their labor rights.[49] If upheld, Starbucks would be on the hook for significant damage awards given the number of stores and employees involved.[50]

III. Discussion

Whether Costco’s pay raises resulted from the Teamsters’ economic pressure or other Costco business plans, raising wages of non-union employees, but not those of union workers amidst contract negotiations with the unionized workers, could be considered an unfair labor practice by the NLRB. When a union believes a company has committed an unfair labor practice under the NLRA, the union, or any person, can file an unfair labor practice charge with one of the NLRB’s regional offices.[51] After an administrative law judge holds a hearing, the judge files a decision and recommended order.[52] Then, an administrative law judge presides over a trial and files a decision.[53] Unless timely exceptions are filed, this decision becomes the NLRB’s final decision and order.[54] Administrative law judges rely on precedents of other cases that deal with similar issues and factual circumstances.[55] Therefore, the Starbucks decision could have implications for Costco choosing to abruptly raise the wages of non-union employees and not those of union workers.

The tentative agreement between Costco and Teamsters has not been voted upon by Teamsters members, meaning further negotiations are possible and that neither Costco nor Teamsters are likely to show their hand. Therefore, it presents some challenges because, without key information, it is difficult to determine whether an administrative judge would deem Costco’s actions as violations of the NLRA or NLRB.

Like Starbucks, Costco announced these raises seemingly abruptly and amidst negotiations with Teamsters regarding the union workers’ contract. Without knowing Costco’s typical schedule for increasing wages and benefits of non-union employees, if any, it is difficult to know whether the timing of the wage increases was intended to interfere with the negotiations. Additionally, without knowing whether Costco offered these same wage increases for union workers during negotiations with Teamsters, it is difficult to apply the Wright Line standard to determine whether Costco had legitimate business justifications or whether its reasons were merely a pretext for discrimination.[56] Finally, without the actual memorandum Costco circulated to announce the raises for non-union employees, it is difficult to analyze whether the memorandum displayed an unlawful motive, like comparing the benefits offered by the company to non-union employees and the benefits offered by Teamsters to union workers. If Costco’s announcement was written to make their benefits look more attractive than the benefits offered by the union, like the judge found to be the case in Starbucks, a judge might find Costco’s motives to be similarly unlawful.

If interested in pursuing litigation against Costco, Teamsters would need to consider Costco’s typical schedule for implementing non-union employee raises and show that the seemingly abrupt pay raises differed from the typically scheduled raises. Teamsters should also be able to address the way in which Costco announced the wage raises of non-union employees and argue that the announcement demonstrated an “unlawful motivation,” as understood under Shell Oil.[57] If the Costco memorandum announcing the wage raises actively compared union worker benefits to non-union employee benefits, Teamsters could likely demonstrate the necessary unlawful motivation, similarly demonstrated in Starbucks. Additionally, Teamsters would likely need to show that Costco did not offer the same raises for their union workers. If able to present these elements, Teamsters could convince an administrative law judge that this differential treatment between non-union employees and union workers was unlawful. Once this union animus has been demonstrated, Costco would have the burden to demonstrate their actions would have occurred the same absent and independent of the employees’ organizing-related actions.[58] If Teamsters is able to present the elements listed, however, they would have a strong case to argue any legitimate business justifications Costco presents were merely a pretext for discrimination.

Costco and Teamsters reached a tentative agreement only narrowly avoiding the CTNMA’s expiration and the union’s deadline before striking, which could imply the two parties would prefer to cooperate rather than remain in conflict. The agreement, however, must still be voted on by the union members, meaning the members could reject the agreement. Members could reject the agreement because they feel the unfair labor practice affected the negotiations, but members could also reject the agreement for other reasons and then utilize the potentially unfair labor practices as tools in negotiations moving forward.

Additionally, while Starbucks is a landmark ruling, the case is on review to the NLRB, which means it is not yet a binding precedent.[59] To exacerbate and further complicate matters, the five-member NLRB only requires three members for a quorum to exercise its authority, and the NLRB had been operating with only three members since December 17, 2024.[60] On January 28, 2025, President Trump fired one NLRB member, Gwynne Wilcox, leaving the NLRB with only two members.[61] Despite the President’s action being considered to be outside the scope of the President’s powers by most constitutional scholars, the resulting litigation that Wilcox plans to engage in to retain her seat on the NLRB will likely drag on, leaving the NLRB with only two members and no ability to exercise its authority for the foreseeable future.[62] Similar to the period in the Obama administration when only two members sat on the NLRB, the agency will likely experience a backlog of work as the NLRB cannot issue a decision with only two members.[63] Therefore, the NLRB is unlikely to rule on the Starbucks appeal, leaving Teamsters with less persuasive authority to litigate against Costco.

IV. Conclusion

Whether the Teamsters litigate a cause under the NLRA, or it allows the Teamsters to take the upper hand in negotiations with Costco, the recent landmark Starbucks case has presented the Teamsters with opportunity. Teamsters may not be roused to file a complaint to a NLRB that is unable to issue a decision for the near future nor encouraged to build a case based on the Starbucks case that is not binding precedent. However, Costco’s actions now have caselaw that might at least be persuasive for a judge to rule that Costco violated the NLRA. Despite the potentially persuasive case law for actions taken by companies against labor unions, this uncertainty highlights how much room for improvement exists regarding the protection of labor unions’ ability to negotiate a fair contract.

---

[1] Labor Unions and the U.S. Economy, U.S. Department of the Treasury (Aug. 28, 2023), home.treasury.gov/news/featured-stories/labor-unions-and-the-us-economy#:~:text=Over%20the%20subsequent%20decades%2C%20union,20%20percent%20of%20total%20income.

[2] Id.

[3] Labor Unions, Gallup, news.gallup.com/poll/12751/labor-unions.aspx (last visited Feb. 24, 2025).

[4] See Janus v. Am. Fed’n of State, Cnty., and Mun. Emps., Council 31, 585 U.S. 878, 884 (2018); Glacier Nw., Inc. v. Int’l Bhd. of Teamsters Local Union No. 174, 598 U.S. 771, 774 (2023); see Anne Marie Lofaso, Union Repression in an Era of Recognition, 62 Me. L. Rev. 199 (2010) (discussing how past decisions have ultimately repressed unions..

[5] Starbucks Corp., No. 19-CA-294579, JD(SF)-29-23 (2023) (NLRB ALJ Decision).

[6] Who Are the Teamsters?, International Brotherhood of Teamsters, teamster.org/about/who-are-teamsters/ (last visited Feb. 24, 2025).

[7] Id.

[8] Costco Teamsters Overwhelmingly Vote to Authorize Strike, International Brotherhood of Teamsters, teamster.org/2025/01/costco-teamsters-overwhelmingly-vote-to-authorize-strike/ (last visited Feb. 24, 2025).

[9] Teamsters Representation at Costco, Teamsters Local 986, http://www.local986.org/costco.php#:~:text=The%20Teamsters%20Union%20has%20been,workers%20across%20the%20United%20States (last visited Feb. 24, 2025).

[10] Id.

[11] Id.

[12] Agreement Between Costco Wholesale and Teamsters, International Brotherhood of Teamsters, teamster.org/wp-content/uploads/2023/05/CostcoNatCBA22to25_Scan_230517.pdf (last visited Feb. 24, 2025).

[13] Pamela N. Danziger, Costco Strike Averted after Last-Minute Agreement Reached with Teamsters Union, Forbes (Feb. 1, 2025) http://www.forbes.com/sites/pamdanziger/2025/02/01/costco-strike-averted-after-last-minute-agreement-reached-with-teamsters-union/.

[14] Id.

[15] Costco Teamsters Overwhelmingly Vote to Authorize Strike, International Brotherhood of Teamsters,  teamster.org/2025/01/costco-teamsters-overwhelmingly-vote-to-authorize-strike/ (last visited Feb. 24, 2025).

[16] Id.

[17] Id.

[18] Jaewon Kang, Costco, Union Reach Tentative Deal, Averting Strike, Bloomberg (Feb. 1 2025) http://www.bloomberg.com/news/articles/2025-02-01/costco-unionized-workers-reach-tentative-deal-averting-strike?embedded-checkout=true.

[19] Danziger, supra note 13.

[20] Id.

[21] Jaewon Kang & Matthew Boyle, Costco (Cost) Increases Pay to over $30 an Hour for Most Store Workers, Bloomberg (Jan. 30, 2025), http://www.bloomberg.com/news/articles/2025-01-30/costco-increases-pay-to-over-30-an-hour-for-most-store-workers?embedded-checkout=true.

[22] Id.

[23] Parker Purifoy, Starbucks Illegally Kept Wages, Benefits from Union Workers (2), Bloomberg Law (Sept. 28 2023), www.bloomberglaw.com/bloomberglawnews/daily-labor-report/X24QFUHG000000?bna_news_filter=daily-labor-report#jcite.

[24] Id.

[25] NLRB Judge Orders Starbucks to Give Union Employees Wage Increases in Catch-22 Case, Duane Morris LLP (Oct. 31 2023), www.duanemorris.com/alerts/nlrb_judge_orders_starbucks_give_union_employees_wage_increases_catch_22_case_1023.html.

[26] Id.

[27] Id.

[28] Id.

[29] Id.

[30] Id.

[31] Starbucks Corp., No. 19-CA-294579, JD(SF)-29-23 (2023) (NLRB ALJ Decision).

[32] Id.

[33] Shell Oil Co., 77 NLRB 1306 (1948).

[34] Id.

[35] Id.

[36] NLRB Judge Orders Starbucks to Give Union Employees Wage Increases in Catch-22 Case, supra note 25.

[37] Wright Line, Inc., 251 NLRB 1083 (1980). This Wright Line standard has been understood to be that counsel must demonstrate: (1) the existence of union or other protected activity by employees; (2) employer knowledge of that activity; and (3) anti-union animus on the part of the employer. This standard was recently clarified in Intertape Polymer Corp., No 07-CA-273203, (2023) (NLRB ALJ Decision).

[38] Id.

[39] Starbucks Corp., No. 19-CA-294579, JD(SF)-29-23 (2023) (NLRB ALJ Decision).; See also NLRB Judge Orders Starbucks to Give Union Employees Wage Increases in Catch-22 Case, supra note 25.

[40] Starbucks Corp., No. 19-CA-294579, JD(SF)-29-23 (2023) (NLRB ALJ Decision).

[41] Id. at 28.

[42] Id.

[43] Id.

[44] Id.

[45] Id.

[46] Id.

[47] Id.

[48] Id.

[49] Thryv, Inc., 372 NLRB No. 22 (2022).

[50] Id.

[51] The NLRB Process, National Labor Relations Board, http://www.nlrb.gov/resources/nlrb-process (last visited Feb. 12, 2025).

[52] Id.

[53] Id.

[54] Id.

[55] Id.

[56] Wright Line, Inc., 251 NLRB 1083 (1980).

[57] Shell Oil Co., 77 NLRB 1306 (1948).

[58] Wright Line, Inc., 251 NLRB 1083 (1980).

[59] Starbucks Corp., No. 19-CA-294579, JD(SF)-29-23 (2023) (NLRB ALJ Decision).

[60] Michael Sainato, Dismissed Labor Official Sues Trump and NLRB Chair over Firing, The Guardian (Feb. 5, 2025) http://www.theguardian.com/us-news/2025/feb/05/gwynne-wilcox-nlrb-lawsuit-trump.

[61] Members of the NLRB since 1935, National Labor Relations Board, http://www.nlrb.gov/about-nlrb/who-we-are/the-board/members-of-the-nlrb-since-1935 (last visited Feb. 12 2025); Grant Mulkey et al., NLRB Lacks Quorum to Exercise Its Authority Following President Trump’s Removal of Member; the President Also Dismissed NLRB General Counsel Abruzzo, Stinson (Jan. 28, 2025), http://www.stinson.com/newsroom-publications-nlrb-lacks-quorum-to-exercise-its-authority-following-president-trumps-removal-of-member. Accessed 12 Feb. 2025.

[62] Id.

[63] NLRB Is Likely to Operate with Just Four Members for the Time Being, Fox Rothschild LLP (July 31, 2018), laborlaw.foxrothschild.com/2018/07/articles/general-labor-law-news-updates/national-labor-relations-board-nlrb/nlrb-is-likely-to-operate-with-just-four-members-for-the-time-being/.

---

Cover Photo by annapolis_rose on Flickr.