Labor v brand: experts decode Starbucks’ Supreme Court victory for marketers

The case has its origins in 2022, when seven employees at a Memphis, Tennessee Starbucks were fired after allowing a TV crew into the store after hours during their union organizing efforts.

The NLRB argued that the firings were illegal retaliations, and lower courts ordered their reinstatement.

The conservative majority court’s decision now mandates a stringent four-part test for evaluating NLRB injunctions under Section 10(j) of the National Labor Relations Act (NLRA), a law enacted in 1935 to promote collective bargaining and protect workers’ rights.

Critics argue that this ruling curtails the NLRB’s ability to ensure fair labor practices.

The NLRB is the referee of labor management relations, enforcing laws that protect the right of workers to organize.

America's biggest union-busters don't want to play fair. pic.twitter.com/DGqcNeyeLp https://t.co/qOPQWHvaDT

— Inequality Media (@InequalityMedia) June 13, 2024

In response to a request for comment, Starbucks emphasized its belief that its partners are “the core of [its] business,” and expressed commitment to “providing everyone who wears the green apron a bridge to a better future” and “reaching ratified contracts for represented stores this year.”

Beyond the decision’s legal ramifications, some experts are underscoring a broader issue in their wake – that workers’ rights should matter to marketers.

Ripple effects in labor & regulation

Many experts anticipate significant challenges for labor organizing and regulatory enforcement following the Supreme Court’s ruling.

Jonathan Handel, senior counsel at entertainment law firm Feig/Finkel, explains: “This case makes labor organizing harder and makes it more difficult for fired individuals to secure preliminary injunctions reinstating them.”

Although it’s likely that the individuals in this particular case violated company rules by allowing media onto the store premises after closing, Handel observes, “Bad facts sometimes make bad laws.”

Stephanie Alston, president at staffing and recruiting organization BGG Enterprises, shares Handel’s concerns. “This represents a significant challenge for labor organizing efforts,” she says. “By restricting the NLRB’s authority to obtain relief for fired union activists, workers may be [discouraged] from participating in union activities due to fears of insufficient protection and recourse.”

Both Handel and Alston believe the implications of the decision extend far beyond Starbucks.

Handel suggests that the decision may also impact the Chevron deference doctrine, where courts defer to the expertise of government agencies like the NLRB, Environmental Protection Agency (EPA) or Federal Trade Commission (FTC) when creating laws. “This is not only part of the Supreme Court’s anti-labor agenda," he says, "it is also very much part of [its] opposition to the administrative state.”

Alston warns that if major corporations persist in challenging labor regulations, labor relations across various industries could become more contentious: “Companies might increasingly rely on legal avenues to counter union activities, potentially creating a more adversarial environment between employers and employees.”

Brand & consumer relations

Some argue that labor disputes not only pose public relations challenges but also affect brand safety. Ernan Haruvy, a marketing professor at McGill University, believes these issues conflict with Starbucks’ purpose-driven marketing initiatives.

“Starbucks is at war with its employees, which tarnishes its brand image as a socially responsible company that engages in a socially responsible way with its community, its suppliers and its workers,” he says. “Starbucks has invested a great deal of its marketing efforts over the years in building a socially responsible image, and its increasing friction with labor is putting that image at risk.”

“From a marketing standpoint," he adds, "Starbucks has already lost and the unionization movement has won. Much of that loss is Starbucks’ own doing through its aggressive anti-union campaign, which has attracted much press and national attention.”

A result of the bad press could be a rise in consumer-led boycotts. Findings from Brand Keys, a brand research consultancy, suggest this is already happening.

Robert Passikoff, founder of Brand Keys, notes declining consumer loyalty toward Starbucks linked to the treatment and labor practices of employees and baristas.

Passikoff points out that recent BDS boycotts, sparked by the Israel-Gaza war, have further contributed to this decline, saying Starbucks “roiled the coffee pot” by suing a labor union over pro-Palestinian social media posts.

“Aspects regarding freedom of speech and politics have entered the consumers’ equations about where they buy, who they support, and whom they boycott,” Passikoff explains. “Consumers now view everything through a political lens, so brands need to be very careful how they behave and how they’re perceived ... Political issues aren’t something any brand should get near.”

Designing a pro-worker marketing strategy

Despite the challenges, not all hope is lost; experts provide valuable advice for Starbucks to incorporate pro-worker sentiment into its marketing strategy and regain consumer trust.

Dr D Anthony Miles, an award-winning researcher and author, proposes several PR strategies for Starbucks amid negative publicity.

The first bit of advice is a PR pivot to put forth their best image and move the focus away from bad press. “Discuss positive existing company policies and perks they have for employees, like tuition reimbursement, college internships, or any employment perks ... to put their best image up front,” he says.

Miles also advises Starbucks to introduce a new product that will get people back in the stores, adding, “this is an old strategy that McDonald’s used when they had a controversy issue surrounding the meat in their burgers.”

It’s also important for marketers to recognize that public sentiment towards unions has improved significantly, according to Handel. “If an employer is seen as anti-union and firing somebody for union activity, it could affect people’s perception of the brand and, as a result, impact business,” he explains.

Handel’s suggestion for Starbucks to rebuild trust is clear-cut: “Reinstate the workers and allow a union election to proceed without opposition.”

He argues that this would resonate with Starbucks’ core consumer base comprised of working-class individuals. “Starbucks isn’t for the wealthy at scale, because there isn’t a scale level of wealthy, nor is it for the impoverished at scale ... Starbucks is economically for the middle class. It’s in the company’s best interest to sustain the middle class, so there’s people out there to buy its goods and services.”

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