Chicago Team All Hands - July 7, 2022

Jordan Buettner

Good evening everyone and thanks for coming out tonight. I think it’s valuable for us to gather as a group periodically to discuss issues important to all of us. At this time, we are going to hear from James McLaughlin, Intelli’s President and CEO, and Lori Haughey, Intelli’s VP of Retail. I also want to be sure that you all know that Andrew Anderson Devine, our head of People and Culture, and Kris Dewey, Director of Retail Operations, are here to support us tonight. Please make sure you say hi to them if you haven’t yet!

I think most of you know James and Lori. They want to spend a few minutes on the upcoming Union election. This is a very important decision for you, your families, your co-workers today and future Chicago baristas and shift leads, tomorrow. This is why you need to hear from James and Lori and make an informed decision when you vote.

A few words about tonight’s remarks before James and Lori speak. First, The National Labor Relations Board has strict rules about when we can meet as a group. That is why this meeting is being held today, and why we won’t have another group meeting before you vote.

Next, you may be wondering why I’m reading from prepared notes. James and Lori will be doing the same. This is because the National Labor Relations Board also has strict rules about what we can and cannot say before an election. Intelligentsia has followed all those rules since being notified of the election petition. Because this is the only meeting we will have with the entire retail group, we want to be absolutely sure that we have a record of exactly what was said. All three of us would much rather talk directly with you and not rely on prepared notes, but we want to be sure there is no question about what we say and that we are following all NLRB rules. We want to have a record of what is communicated to the group tonight. For this reason, we will not have any discussion or group Q&A following James and Lori’s remarks. But, an important distinction, James and Lori, along with Andrew, Kris and me, will be available tonight if you have questions for us. We will be available to answer your questions. This format is awkward for all of us, but also an example of NLRB rules we have to follow.

We will also be in the coffeebars over the next several days and are happy to answer any questions when we see you there. With that, I’m going to turn things over to James.

James McLaughlin

Thanks Jordan. Let me start by saying how great it is to be here with you tonight. There are a lot of exciting things happening across all our coffeebars and in other parts of the company. Before I get started, I want to mention how awkward it is for me to have a typed speech that I’m using to talk to you. This really isn’t my style, but something I have to do so that we stay within the bounds of the National Labor Relations Act.

Ballots - Overview

First, I wanted to share some information about the upcoming election. This Thursday, the National Labor Relations Board will mail ballots to your homes so that you can vote on whether you want the International Brotherhood of Electrical Workers, Local 1220 to represent you for purposes of collective bargaining. The NLRB is mailing you ballots, instead of hosting in-person voting, as part of their COVID protocols.

There are three very important dates for everyone to be aware of:

• The first is July 14. If you do not receive your ballot by July 14th, you must request a replacement ballot from the NLRB.

• The second important date is August 4th. Your ballot must be returned to the NLRB, in the envelope provided, no later than 5:00 p.m. on August 4th. This is really, really important. If the NLRB does not receive your ballot by the deadline, it will not be counted.

• Third, the ballots will be counted by the NLRB on August 8th and they will announce the outcome of the election that same day.
  
  

Please make sure to vote so that your voice is heard. The outcome of the election is determined by the majority of the votes cast. What does this mean? It means that here at Intelligentsia there are 27 employees eligible to vote. If only 10 employees vote and 6 vote for union representation, the majority of votes cast chose union representation. This means the union will represent all 27 current employees, and all those employed as baristas and shift leads in our Chicago coffeebars going forward. In my example, 6 employees determined the outcome for everyone. This is why every vote counts and we encourage everyone to vote.

We will distribute guidance on how to make sure your ballot is not disqualified by the NLRB. One thing that is of utmost importance is that the only mark on the ballot is the X expressing your choice – YES or NO. Please do not sign or otherwise mark on the ballot. The ballot will be placed in an envelope supplied by the NLRB. You will need to sign that envelope to confirm that you are the person who filled out the ballot. The NLRB-provided envelope is postage paid. You can drop it into any US mailbox for return to the NLRB. When the NLRB receives your ballot, it will check your name off the voter list, remove the ballot from the envelope and place all the ballots in a box or bag prior to the count.

I’m sharing this information because I want to reassure you that no one will know how you vote – not the union, not the NLRB, and not Intelligentsia – unless you disclose how you vote. You should feel confident that you are voting by secret ballot and free to vote as you believe is best for you. Hopefully it goes without saying, but please mark you ballot in confidence, by yourself (not with others present), and be responsible for placing your ballot in the mail – please don’t rely on family, friends, or coworkers to do this on your behalf.

JTM Background

As you know, I am the CEO of Intelligentsia. I’ve had the privilege of working at Intelli since 2012 in various positions – I started in green buying, quality control, roasting, and then began running operations, and in 2014 Doug and Emily asked me to take over as CEO. Before coming to work at Intelli, I was actually a long time customer. When I moved to Chicago for law school, I lived around the corner from Broadway. Every morning before I went to school, I’d stop in for a coffee. When I began practicing law in Chicago, Mill Park became my coffeebar. During the winter I’d stop at the Pedway for a cortado each morning. So being a customer was really my first foray into specialty coffee. After practicing law for 5 years, I decided that I needed to do something different. So I moved with my wife down to Brazil and together we ran a small coffee farm for 3 years. It was there that I learned about farming, about processing coffee, and even roasting. I fell in love with coffee in Brazil and knew that I wanted to make it my career. When my wife, daughter, and I returned to the US, I wanted to find a company that valued all parts of coffee – from farmer, to QC department, to roaster, to production, to barista. I was fortunate to land with Intelli. This is a company the values coffee and all the many hands that go into making extraordinary coffee. This team gathered here tonight is responsible for showcasing the coffees that we spend countless hours sourcing and roasting and ensuring that each coffee sings in the cup. I can’t tell you how many times I’ve been standing in line and overhear a customer tell someone else that the coffee they are about to enjoy is going to blow their minds. You are the final step in this process that starts thousands of miles away and I’m grateful for all your hard work. Your attention to detail with every cup of coffee that crosses the counter furthers our mission to make extraordinary coffee an agent of change.

Collective Bargaining

I realize that unions representing retail coffeebar employees is in the news. Like you, I follow what is happening at Starbucks and Colectivo. But I wanted to share a different perspective. One thing that I’ve noted is the length of time it has taken for collective bargaining to start at Colectivo - nearly two years since the election result were announced.

Andrew and I posted a video in June that talked about collective bargaining, what it is and what it means, so I won’t cover all that again, tonight. Basically collective bargaining is the process that a union and a company engage in to define all the terms and conditions of employments for union employees. If you haven’t seen the video, I encourage you to take the 4 minutes to watch it.

So back to Colectivo. For two years, those workers have not had ANY changes to the terms and conditions of their employment. [That means no changes to their pay, their holidays, or their benefits.]. And who knows how long it might take for the company and the union to reach a contract under the collective bargaining process. They just began that process on June 28th a week ago. I know that the union blames Colectivo for this delay and accuses the Company of “union-busting” activities. I cannot speak to the union’s allegations, but they don’t surprise me – it’s easy to pass the blame. After all, the union hasn’t been able to force the company to do anything and nothing has changed for the union represented employees in nearly two years.

At Starbucks, bargaining has started at some stores, but not at all stores that have voted for the union. Most significant is that there is no agreement for any Starbucks employees and, from what is reported in the media, an agreement is not expected any time soon. Collective bargaining is a time-consuming process – you should consider whether you are willing to wait for that process to be completed for changes to occur.

This could be why some of the local Starbucks employees – including those at the café across the street - rejected union representation. Perhaps those employees realized that they don’t want to wait for changes to be brought by union representatives. They want to accomplish change directly with the store manager and local management.

New Benefits

I’m proud of our Intelli team. As a company, we provide all our employees with competitive pay, good benefits, pleasant working conditions and, most importantly, the opportunity to effectuate change internally and directly, without negotiation with an outside, third party who knows little about our business. In the last few weeks, we announced changes in benefits for all our employees, but especially those in retail. In response to concerns that you raised with our People & Culture team, we increased the number of holidays for retail employees from 2 to 8. This is 6 more days a year when you receive pay if you are not scheduled to work and 1.5x pay if you are scheduled to work. We did this in response to YOUR feedback – you didn’t need a union for this.

We also added Juneteenth and MLK’s birthday as holidays in recognition of the diversity within our workforce. Again, you didn’t need a union for this.

We increased parental leave – all new parents now receive 6 weeks of paid time off following the birth or adoption of a child, and birth mothers receive an additional 6 weeks of paid time off. And we continue to offer employees 4 different types of Blue Cross Blue Shield health insurance, dental, vision and company paid life insurance. We just wrapped up open enrollment and I hope that you all saw that there was no increase in employee contributions to insurance – a huge achievement considering how prices for everything else keep rising. All of this was done without a union.

I suspect the union may be telling you that they will get you “free” benefits or negotiate lower contributions for Intelli’s plans. These are typical campaign promises aimed at piquing your interest. But nothing is “free.” The Union can make these proposals during negotiations, but Intelli might not agree. Or Intelli might ask for concessions elsewhere in return for agreeing to the union’s proposal. In the meantime, do you know what choices you have under the union benefits plan? Do you know if you will be able to keep your doctors, dentists or other healthcare providers? Do you know the details of the union’s plan – for example, are there any lifetime caps attached to benefits?

Finally, we also gave pay increases of 5% in April 2022. We provided our Broadway employees with a temporary pay incentive due to the construction work at that building. And we continue to provide safe, clean coffeebars for you and our customers. We did this without any union intervention. We provided 5% pay increases to Intelli’s – that’s more than the 2.5% - 3% increase the Union agreed to for its members at WTTW.

Now, I know that we are not perfect. But I hope you all realize that a union cannot fix everything and there are some things a union cannot fix. Most importantly, a union cannot fix something that isn’t broken. I don’t think we are broken. I think we are responsive and listen to all our employees. Our recent changes – increasing holidays for retail employees, recognizing Juneteenth and MLK’s birthday as holidays, giving pay increases above the national average – are just a few examples of how we take your needs and wants into account. And, please don’t listen to any union representative who tells you that we just did those things because a petition was filed. That is simply false. These decisions were announced as part of our annual benefits renewal and open enrolment but were made several months ago as part of our budget planning process. The Petition for Election had nothing to do with the rollout of these benefits.

If you elect the union as your representative, the union “wins” the right to negotiate for you. Nothing changes immediately or automatically. I know it sounds trite, but in collective bargaining you might get more, but you might get less or exactly what you have now. No one can predict what might occur in negotiations.

What I can tell you is that if the union was representing you when we increased holidays for the company, when we gave 5% annual pay increases, and when we increased parental leave, you would not have received any of those benefits automatically. Your terms of employment would be governed by a collective bargaining agreement, typically setting employment terms for three years and the terms don’t change in those three years while the agreement is in place. This is how terms of employment for employees at the same company can be different if some of the employees are represented by a union and some are not.

As union represented employees, you might be treated differently than all other Intellis. And, if a collective bargaining agreement is in place, you might need to wait until the next negotiations to ask for these same benefits. You might get them as part of a new contract, but you might have to give up something you already have in return.

So, what I want you to consider is the reality of having a union represent you. This is why we have been encouraging everyone to Be Curious.

The reality of having a union is that changes will need to be negotiated, not provided. The reality of having a union contract is that the terms stay in effect for the duration of the contract unless the union and Intelligentsia agree to a change. It’s not automatic. And it is a very different way of working, of being employed, than what we have today.

Have you considered what contract terms might be beneficial to only the union and whether the union might give up something you have now in order to get this contract term? For example, Illinois is not a “right-to-work” state. This means that the union can negotiate a term into the collective bargaining agreement that requires baristas and shift leads to become union members, or members in good-standing, in order to remain employed by Intelligentsia. If you don’t comply, THE UNION can require Intelligentsia to end your employment. You will have to join the union, even if you don’t want to, or if you don’t agree with the terms of the contract, just to keep your job.

Becoming a union member or member in good-standing means paying dues. Has the union told you what dues you will be required to pay? Currently, IBEW Local 1220 dues are assessed at 1.7% of your gross pay. At Intelligentsia, gross pay includes your hourly wage, all tips that you earn, your holiday pay, your vacation time, and even your sick time. In the IBEW Local 1220 Spring/Summer newsletter, the union announced a proposed change to the dues assessed to members. The proposed change is to charge monthly dues of $15.00 plus 1.5% of gross pay. In addition to the dues members pay to the Local 1220, members also owe dues to the International organization. Currently, the International organization requires all members to pay $20 per month. This means that if you are earning $22 an hour in base salary plus tips, and you work 140 hours per month, your current monthly dues to the International Brotherhood of Electrical Workers would be approximately $72 a month, and if the change is passed, approximately $81 per month. [$22 x 140 x 1.7% = $52.36 + $20 = $72.36. $22 x 140 x 1.5% = $46.20 + 15 = $61.20 + $20 = $81.20]. If the change goes into effect, you would be working over 3.5 hours a month just to cover your costs to the union! That will be your money, not Intelligentsia’s, paying the union dues. This is another reason why we have been encouraging everyone to Be Curious. It is important you know what you will be paying for if a union is voted to represent you.

Lastly, I want to remind you that you cannot just “give this a try.” Bringing in a union is much easier than getting rid of the union. By law, if the union wins the election it will be your representative for one year, even if you change your mind. Moreover, you cannot shed the union during the term of a collective bargaining agreement up to three years. If the union gets the majority of votes counted on August 8th, the earliest the election results can be certified is August 15th. The union cannot be removed for one year – August 15, 2023. If the union signs a three-year contract on August 14, 2023, it remains your representative until at least August 14, 2026. This is the case even if you disagree with the terms of the contract. That’s a long time to pay dues and have the union be able to require us to fire you if you don’t. And those rules will also apply to all baristas and shift leads who come to work for Intelligentsia through August 2026, too. That’s why your vote is important. The outcome of this election impacts you, your coworkers, and your future coworkers, too.

In closing, it goes without saying that I don’t think you need a union to represent you – any union. You currently have the ability to voice concerns to your store managers, assistant store managers, and to People & Culture. You currently enjoy competitive pay and benefits. You’re currently part of a successful team – a team that works together to provide extraordinary coffee to customers each and every day. I hope you consider your value to this team, and how your roles might change, if you decide to vote for the union. The decision is yours and I urge you to consider all the facts when you mark your ballot.

I’ll be around after Lori speaks to answer any questions you may have. Now, I’d like to turn things over to Lori to wrap us up.

Lori Haughey

Thanks James. It’s great to see everyone tonight – thanks for being here and for your attention. As most of you know, I’m Intelligentsia’s VP of Retail. I’ve been in this position for a little more than five years. Among other things, I’m responsible for our 14 coffebars in Chicago, LA, Austin, New York, and Boston. I’m proud of the retail team we have assembled. The leadership here in Chicago – Jordan, Phil, Grace, Nathan, and Ken– is terrific. This team successfully balances our business objectives while taking care of our baristas and shift leads. I realize you might not see that every day, but I can assure you that not a day goes by without one of these leaders bringing an issue to my attention. Whether you appreciate it or not, they have your backs.

I just wanted to spend a few minutes tonight sharing with you what having a union in our coffeebars will mean to us. Our coffeebars operate on a simple premise – provide extraordinary coffee / tea beverages to customers to carry out or enjoy in a pleasant café. As a team, we work together and hard to achieve this goal every day. Like James, I want to thank this team for your work – your efforts are appreciated.

So what might change with a union? The easy answer is “I don’t know – none of us know.” But as the person ultimately responsible for our retail operations, I have to dig a bit deeper and be prepared. Now, it goes without saying that if you vote NO and there is no union, nothing changes. You will continue to have direct access to me, to Jordan, to your managers and to People & Culture to voice concerns and advocate for yourself. I continue to believe that each of you is your own best advocate and you don’t need to pay an outsider to represent you. I think I can speak for all of the managers when I say we much prefer to address your needs individually and directly.

With a union, you will need to voice your concerns through the union. Even the smallest concern might take days or weeks to address. Even if you, your manager and I agree on a resolution, if the union disagrees, it can’t happen. For example, if you need to take some time off for personal reasons, if the contract does not provide for personal leave, we would not be able to grant the leave without the union’s approval. My concern is that we will need to stop treating you as individuals – something I really value – and instead make decisions based on all of you collectively. I won’t be able to consider your personal situation.

More importantly, I have concerns that having a union might create a schism within our coffeebars – perhaps not intentionally, but driven by union work rules. Today, if I walk into a coffeebar and see that you’re slammed, I can jump in and help. I can take orders, make beverages, clean/bus tables – whatever it takes to help. Jordan, Phil, Grace, Nathan and Ken, do this every day. If the union contract prevents non-bargaining unit members from helping, we won’t be able to help. I might be in the coffeebar, but I won’t be able to help you. I find that frustrating – and I have to be concerned that our customers might venture to one of our competitors if our service falls off. I’d like for our workplace to remain team oriented – not “I can’t help you with that.”

I have concerns about scheduling. I know you all appreciate that operating seven days a week can make scheduling complicated. We try very hard to respect your availability and preference for work times. I think we’ve been successful in doing this. What happens if the union requests a more rigid scheduling method? Ha – what happens if Intelligentsia proposes a more rigid scheduling method and the union agrees? Will you be happy being required to work a shift you don’t like?

I know some of you work at more than one coffeebar. This allows you to pick up hours at times that work for you. It also helps Intelligentsia knowing that we have trained baristas and shift leads able to work at different locations. What if the union proposes a contract provision that eliminates this flexibility? Certainly, the Union prefers that we hire more workers – that’s more dues for the union. I understand that this is all hypothetical, but it’s what keeps me up at night. Not all change is good. Having a union will change how we operate. Exactly how, I don’t know yet. None of us do. But it will be different, that I know.

I have concerns about compensation. I know you all have commented that your compensation is eroding with rising inflation. Each year, we review your compensation and award a cost-of-living adjustment. This pay adjustment is given to all eligible employees without regard to organizational profitability, employee productivity, or other performance factors. The purpose of a cost-of-living increase is to protect your purchasing power against rising inflation, determined by the rise in the Consumer Price Index (CPI-W) from a lookback period. We provided everyone, across the board, with a 5% pay increase at the beginning of April. We also completed several calculations based on a lookback period and can confirm that our Baristas, Shift Leads and Assistant Managers make an average of $25 dollars an hour, which includes base compensation and tips. This is well above the minimum wage in Chicago of $15.40 an hour, and above the living wage calculation for Cook County of $19.29 an hour. Let me be clear, we are extremely sensitive to the overall compensation of all our workers. We want to ensure you are able to meet your basic needs with the compensation you are provided. And with changing circumstances, we can sometimes make decisions about compensation or benefits swiftly. For example, we provided one-time, $300 bonuses, to all our staff in 2021, due to the extraordinary year that was 2020. We also set up COVID-19 Emergency Sick Pay so employee sick time balances would not be depleted due to extraordinary circumstances, like quarantine/isolation. For those of you have had to take time off for Covid, State of Illinois lifted in September 2021. We continued that program. In that time period, company has paid thousands of dollars out in Chicago retail. Still have Covid leave for sick children. Not required. Add – if collective bargaining in place no reason for Intelli to continue this policy]. We continue to provide this benefit to employees, even though the legal obligation to do so no longer exists. Having a union will change how we evaluate compensation and benefits or make decisions given dynamic circumstances. Exactly how, I don’t know yet. Again, none of us do. But it will be different, that I know.

In wrapping up for the evening, I want to thank Jordan for putting this event together. I appreciate your efforts as an Area Manager looking out for our team. I also want to thank James, Kris and Andrew for coming out tonight and for hanging around for any questions you may have for them. And I want to thank Phil, Grace, Nathan and Ken for their continued work and advocacy for the Intelli’s they supervise. And, most important, I want to thank the baristas and shift leads for their hard work in making our coffeebars successful – a great place to get extraordinary coffee and hang out with friends or to get some work done. Your contribution to our mission is appreciated.

I think I speak for all the managers on the retail side when I say that we hope you vote NO when you mark your ballot. We much prefer working directly with you to address issues and solve problems. As James said, we are not perfect, but we are a team – a team that works well together. I hope you take all of the information we have provided you into account – I respect that some of you may disagree. I can only hope that each of you are Curious, considers all the facts, not just the promises the union is making, particularly what it might mean to you to have a union.

As James mentioned, July 14th is an important date. Make sure you have received your ballot, or contact the NLRB by this date if you haven’t. It’s also important to know that if you signed a union card or petition or promised a union representative or a coworker that you would vote for the union you can still vote NO. Any card or petition you signed was not your vote or a commitment on how to vote. The ONLY thing that counts is the ballot you mark and return to the NLRB. And, under the NLRB rules, that ballot is secret. The only way someone will know how you voted is if you choose to tell them. Lastly, August 4th is an important date. Your ballot must be in the hands of the NLRB by this date to count in the final vote tally.

As Jordan said that the outset, we are not going to have any group discussion or Q&A. But James, Andrew, Jordan and I will be around if you have any questions. Thanks again for your attention. Good night.