Nasir Pasha & Matt Staub

Starbucks Suffers from a Holiday Promotion Gone Awry [e121]

Nasir and Matt close out the week by talking about the Starbucks’ promotion that resulted in untended buy one get one free offers.   The guys then answer, “Can I have one of my employees also be a contractor for special events?”

Here is the image of the coupon and the tweet exchange with Starbucks from @daveraleigh.

@daveraleigh Screenshot


NASIR: All right.

Welcome to Legally Sound Smart Business. My name is Nasir Pasha and I have switched up the intro. I messed up already but that’s okay.

Welcome to our podcast where we cover business in the news and answer some of your business legal questions, and my name is Nasir Pasha – oh, no – and you can send in your emails because, if you’re listening, you can send an email to My name is Nasir Pasha.

MATT: And I’m Matt Staub.

NASIR: There we go. That was actually a perfect intro, and I assume it’s a perfect intro because Chris did his magic and just cut everything up perfectly.

MATT: It is definitely in the top 121, that’s for sure.

NASIR: Hey, wait a minute, we’ve done 121 episodes.

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MATT: Yeah, made the top.

So, we’ve got a couple of things today and they’re sort of related to each other. The first one we’re going to talk about is Starbucks. I don’t go to Starbucks because I don’t think it’s good coffee – unless it’s the only option – but I guess, when it flipped to November, everyone was saying, “Oh, red cup, it’s red cup time!” I was like, “I don’t even know what that means – red cups.” I guess they bring their holiday cups out once it hits November 1st.

But people get really excited for these holiday drinks. I mean, the pumpkin spice latte, that’s in October but that’s a massive following. That’s like a cult following and then there’s these holiday drinks that Starbucks rolls out. It used to just be like a peppermint one and maybe an eggnog, and now they have all these chestnut praline latte – that’s just over the top.

But anyways, they give these little cards out and it was a “buy one, get one free” deal, “buy one, get one free” beverage for holiday beverages, but it does not specify that it needs to be holiday beverages only. So, one man went and they denied him the “buy one, get one free” and so, let’s buck this whole thing, this is contract interpretation at its finest and that’s what this is.

NASIR: I didn’t see it but the fine print is pretty clear. It says, “Buy any handcraft beverage.” It does say on the top, it says, “Buy a holiday beverage,” whatever that may mean.

MATT: Right.

NASIR: Usually, the specific and general always – and this is basic contract law – the specific always supersedes the general. And so, a holiday beverage is kind of, “Okay, what exactly does that mean?” But, when it says, “Buy any handcrafted beverage and get one of equal or lesser value for free,” that seems pretty clear to me.

MATT: Yeah, but I mean, this is like classic, right? Because how many times have customers either rightfully or wrongfully taken advantage of certain fine print core mistakes, you know?

You know, people that are really into coupons know about this very well because they read the fine print pretty clearly – you know, whether it’s transferable, whether you can use more than one coupon, and the classic scenario with Michael Scott, right? The five golden tickets.

NASIR: The golden ticket promotion. Does it say limit one per customer? No.

So, this is very classic in that respect. But, you know, the local Starbucks didn’t handle it properly, but the corporate Starbucks was very right in saying that, “We will honor the beverage offer because that is what is ascribed in the fine print and we don’t want the argument over fine print to be the customer experience,” and you don’t want that.

The idea of the coupon is to bring people in and so forth. But then, if they get in there and they have disappointment, then what’s the point anyway? I mean, it kind of turns you off the company from itself.

MATT: Yeah, you are Starbucks and you need to make sure that that’s all and issues like this. And, if you’re Starbucks, just give the people that complain like the “buy one, get one free.” You make so much money anyways. It doesn’t really matter.

How many times do they give away drinks because they give away the wrong drink or something like that?

NASIR: Yeah, I think you’re right. I mean, I’m looking at this couple – again, maybe we’ll link it again, to the image of the article at least – but even I, if I look at this, “Oh, okay, buy a holiday beverage, get one free. Oh, wait a minute. What does that mean?”

Whether I’m a lawyer or not, I think I would look at the fine print and say, “Oh, it says any beverage. Oh, okay, cool,” and I would just do that. Then I’d go into the Starbucks and I would assume that. So, I don’t think it was unfair in this case. But you’re right; there are people that definitely can take advantage of it – for sure.


“Can I have one of my employees also be a contractor for special events?”

One of Nasir’s personal favorite questions.

NASIR: I already know the answer is yes, but I’m just trying to think of how would this happen at special events and so forth and what they’re actually doing and whether that is a different position necessarily.

So, like I said, it is possible. Is it necessarily advisable? I’d be very cautious about it.

MATT: Yeah.

NASIR: Because you have to make sure that each position is different and you have to also make sure that each position is in fact classified differently.

The problem is, even if they’re completely two different positions, it’s very difficult to maintain the control over an employee and then give them another position on a special project and then not maintain the same amount of control, right?

To me, the only way that it really works, and let’s say that this person is not only an employee but also owns a catering business or a cook, you know? Has an office job but is also a cook.

And so, for this special event, you hire them as a cook, then that makes sense because they’re completely different things and they are a cook by trade or by hobby and so, therefore, there’s a big differentiation. But let’s say you’re a secretary from Monday through Friday, then you have a special event on Saturday and you act as the receiver for people that come in – you know, the greeter or whatever – then it’s like, okay, is that really a different position? I don’t know.

MATT: Hypothetical situations, I can think of ways this would happen–

NASIR: –but the IRS has opined on this very specific issue and they talk about the different things to look at. But, frankly, you know our position on this. If you have to air on either side, just put them in an employee.

I mean, think about how much are you really saving on payroll tax or anything like that for one specific event, right? So, the advantages of that are not that big of a deal. I guess maybe I don’t know if workers’ compensation premiums would be different if those were different job duties or whatever but, at the same time, if they are very different duties like a cook versus an office worker than something like that, then maybe it makes sense, I suppose.

MATT: All right, yeah, independent contractor, employee.

NASIR: All right, contractor/employee, very good.

All right. Thanks for joining us everyone and have a good weekend if you’re enjoying this on a Friday. If you’re enjoying this on a Monday then—

MATT Welcome back.

NASIR: Welcome back. Welcome to our Monday episode.

MATT: Yeah, we’ll roll it right in. All right, keep it sound and keep it smart.




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