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Bitter taste: Starbucks smacked with a $4.5m bill over missing wages

Business

Starbucks has paid back more than $4.5 million it underpaid to staff and entered into an enforceable undertaking with the Fair Work Ombudsman.

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The company joins a long list of cafes and restaurants hit with claims for wage theft.

The Starbucks case affected workers in 52 stores in Brisbane, the Gold Coast, Sydney and Melbourne and follows a self-reporting of the issue to FWO in 2020.

The company has had a troubled existence in Australia where it was forced to close 61 of its 84 stores in 2008. Since then it has rebuilt.

FWO said most of the underpayments were the result of Starbucks failing to pay part-time staff the correct overtime pay.

The underpaid staff were baristas, supervisors and assistant managers and FWO said many were young. Some were owed $18,000.

FWO said Starbucks failed to comply with the award requirement to have written agreements in place specifying the regular workdays and hours that made up each part-time employee’s ordinary hours of work.

“This led to Starbucks often failing to recognise when part-time employees were entitled to be paid overtime entitlements,” FWO said.

Some part-time employees were also underpaid annual leave and public holiday entitlements.

A smaller number of full-time store managers were also underpaid due to Starbucks paying them annual salaries that were insufficient to cover their minimum award entitlements, given the significant amounts of overtime and weekend work they performed.

Starbucks has made payments of $4.57 million – including more than $4.34 million in wages and entitlements, more than $180,000 in interest and more than $40,000 in superannuation – to 2427 current and former employees, who were underpaid between 2014 and 2020.

Individual back-payments range from $20 to $18,574. The average back-payment is $1883.

The enforceable requires Starbucks to provide evidence to the FWO of its completed back-payments by the end of September.

Fair Work Ombudsman Anna Booth said an EU was appropriate because Starbucks had cooperated and demonstrated a strong commitment to rectifying underpayments, including devoting significant resources to engaging independent experts to oversee its rectification.

“Under the Enforceable Undertaking, Starbucks has committed to implementing stringent measures to ensure workers are paid correctly. These measures include engaging, at the company’s own cost, audits of its compliance with workplace laws over the next two years,” Ms Booth said.

“This matter demonstrates how important it is for employers to place a high priority on their workplace obligations. For Starbucks, a failure to have written agreements in place for part-time staff and a set-and-forget approach to paying some full-time staff on annual salaries resulted in significant underpayments and rectification costs.

“Employers need to be aware that taking enforcement action to protect young workers and improve compliance in the fast food, restaurant and café sector are priorities for the FWO.”

Under the EU, Starbucks must make a $150,000 contrition payment to the Commonwealth’s Consolidated Revenue Fund.

Starbucks is also required to provide FWO with evidence of the new systems and processes it has put in place to ensure future compliance, commission workplace relations training for payroll and store management staff, write to affected staff to apologise, and make corporate governance improvements.

Employers and employees can visit www.fairwork.gov.au or call the Fair Work Infoline on 13 13 94 for free advice and assistance. An interpreter service is available on 13 14 50.

FWO said the issue did not affect one outlet at Sydney Airport.

 

 

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