Starbucks is actively addressing the impact of store closures by offering comprehensive severance packages to its managers. The coffee giant has revealed details regarding benefits that could extend up to 26 weeks of pay for eligible employees. This information came to light in a document titled “Severance Summary,” which was reviewed by Business Insider.
According to the severance package outlined in the document, shift managers stand to receive 120 hours of their hourly wage. For assistant store managers, the severance consists of 240 hours plus an additional 40 hours for each year of service, with a cap on the total severance pay at 1,040 hours. Coffeehouse leaders are assured at least six weeks of pay, with higher-tier employees receiving varying amounts based on their job level and tenure. Overtime-exempt coffeehouse leaders, for instance, will get a base of eight weeks plus one additional week for every completed year of service, up to a total of 26 weeks.
Typically, retail workers do not receive severance payments due to state and federal regulations that apply primarily to larger layoffs involving more than 50 to 100 full-time employees. Employment lawyer Walker Harman has noted that Starbucks’ offer appears to exceed these legal requirements, calling it a “positive thing.” In an effort to mitigate the impact of these closures on employees, Starbucks CEO Brian Niccol recently emphasized the company’s commitment to assist partners in finding positions at nearby locations and to provide robust severance packages for those who cannot be placed immediately.
Business Insider previously reported that baristas and shift supervisors affected by the layoffs are slated to receive severance pay equivalent to 60 and 84 hours of pay, respectively. In addition to severance, all affected employees have the opportunity to maintain their health insurance coverage under the company’s health plan until the end of October, along with funding for an additional three months through COBRA.
These workforce reductions coincide with Starbucks’ strategic decision to close approximately 1% of its North American stores, translating to over 100 locations. Harman pointed out that it is common for employers to require employees to sign a release agreement in order to receive severance payments. However, he also clarified that federally mandated benefits like COBRA cannot be contingent on the signing of such an agreement.
The severance summary specifies that employees will have a 45-day window to review and sign this release agreement. Additionally, workers will be compensated for their scheduled shifts for the week ending October 5, while those in certain markets, including California, Illinois, and New York, can expect pay through October 12. Starbucks has indicated in its SEC filings that it anticipates incurring around $1 billion in costs due to these store closures, with an estimated $150 million specifically attributed to employee separation benefits. Amid these operational shifts, Starbucks’ stock has recorded a decline of 12% over the past year.
