Starbucks has announced a second round of layoffs and the closure of hundreds of its cafes in US. In the wake of the closures, which will affect roughly 400 locations by the end of September, the company has revealed the details of its severance package for affected employees, including baristas, shift supervisors, and other retail staff.
With a total of 18,734 stores in North America at the end of June, Starbucks is expected to have around 18,300 stores by the end of the month.
Severance package details
In a document titled “Severance Summary,” Business Insider revealed that laid-off baristas and shift supervisors will receive 60 and 84 hours of pay, respectively.
These payments will be based on the hours worked prior to the layoffs, with compensation based on hourly wage rates that range between $15 to $22 for baristas, depending on location.
Shift supervisors, who typically earn between $20 and $29 an hour, will also receive pay based on their hours worked.
Additionally, café attendants, who are responsible for maintaining store cleanliness and organisation, will be entitled to 30 hours of pay upon their departure.
As part of their severance, all affected retail employees will also be given the opportunity to receive a lump sum payment equivalent to three months of health insurance premiums.
This provision will ensure that their healthcare coverage continues for three months after their layoffs, in line with the Department of Labour’s COBRA Act.
Starbucks is also offering laid-off employees 45 days to decide whether they wish to sign a release agreement in exchange for their severance pay.
While severance packages are not required by law for hourly workers in most states, Starbucks has gone a step further by offering these comprehensive benefits, providing employees with some financial cushion as they transition out of the company.
Why is Starbucks laying off employees?
Starbucks has outlined specific details regarding vacation hours. Employees in nine states will receive payment for any unused, accrued vacation hours, though employees who had vacation time granted but not yet used will not be paid out for that time.
In an open letter sent to employees, CEO Brian Niccol states that Starbucks’ commitment to helping affected workers find alternative opportunities within the company.
“We’re working hard to offer transfers to nearby locations where possible and will move quickly to help partners understand what opportunities might be available to them,” Niccol said. “For those we can’t immediately place, we’re focused on partner care, including comprehensive severance packages.”
Starbucks anticipates that the total cost of its store closures will amount to $1 billion, with $150 million of that sum earmarked for employee separation benefits.