Longtime CEO Howard Shultz testified before a Senate committee as the company’s labor violations stack up.
When it was clear that some of the first Starbucks might begin unionizing in late 2021, the company brought in the big guns. Starbucks’s longtime chair and CEO Howard Schultz personally conducted captive audience meetings, where workers were forced on the clock to hear why unions were bad for them from the people responsible for their paychecks. Soon thereafter, Schultz returned to the company as interim CEO while the global coffee chain tried — often illegally — to stop its growing union movement.
Schultz, who stepped down from that CEO position earlier than expected this month, had to answer for his and the company’s behavior on Wednesday when he testified before the Senate Health, Education, Labor, and Pensions (HELP) Committee as part of its investigation into federal labor law. The committee questioned him about the more than a dozen cases in which the National Labor Relations Board (NLRB) found the company had illegally violated federal labor law.
Schultz generally did not accept the idea that Starbucks had broken the law, instead considering the NLRB decisions and orders to be “allegations.” When asked by Senate HELP Committee Chair Bernie Sanders if he’s aware that NLRB judges ruled that Starbucks violated labor law more than 100 times, Schultz responded, “Sir, Starbucks Coffee Company unequivocally — let me set the tone for this very early on — has not broken the law.” He added, “We’re confident that those allegations will be proven false.”
As Connecticut Sen. Chris Murphy put it, “It is akin to someone who has been ticketed for speeding 100 times saying, ‘I’ve never violated the law because every single time the cop got it wrong.’”
Starbucks Workers United, the union formed just over a year ago, is hoping that Shultz’s appearance on Capitol Hill will bring attention to their fight. Since the initial two stores voted to unionize in Buffalo, New York, nearly 300 Starbucks locations nationwide have done the same. But weak union law has enabled Starbucks corporate to delay contract bargaining, and without a contract, the unionized workers could be losing out on higher wages, improved benefits, and better working conditions.
But this week’s Senate hearing took place alongside a number of other developments, including recently issued court orders and a vote by Starbucks shareholders, which could collectively compel the company to come to the table and take the union seriously.
The outcome of the Starbucks union movement will have far-reaching effects on the wider union movement the baristas helped usher in. Since the first Starbucks unionized, a number of other companies in industries where unions had been unheard of have also voted to unionize, including Amazon, Apple, and Trader Joe’s. Their efforts could help stop decades of declining union membership and could determine what work is like for millions of other Americans. They also show how resilient the era of worker power has been, as job openings outnumber those willing to fill them and Americans demand more from their workplaces.
While the initial votes to unionize at these companies were historic and well-documented, the slow, painstaking, and arguably most important process of bargaining for a contract has gotten less publicity.
Starbucks Workers United and Starbucks corporate have currently been in a year-long impasse over whether bargaining meetings are allowed to happen via video call, as they did earlier in the pandemic. As reasons to allow bargaining members to join sessions by Zoom, the union cites the ongoing pandemic, the difficulty of commuting, and the desire to include members of a centralized national bargaining committee in individual store bargaining. But the company says that relying on video calls would undermine the personal nature of the bargaining conversations and could result in outsiders listening in.
The NLRB determined on March 27 that the company illegally refused to bargain on Zoom.
Union law requires that companies bargain in good faith but doesn’t provide a timeline in which to do so. Currently, while Starbucks and the union have had initial meetings for about 90 stores, they have held second meetings in only a handful of those cases. Bargaining over a contract usually takes many, many meetings. These delays have contributed to slowing union growth and fears that the process of bargaining will outlast the Starbucks careers of those who originally unionized their stores. But pressure both within and outside the union process might help speed things along.
On March 1, an NLRB judge found that the company, in its attempt to quash the Buffalo New York union drive, violated federal labor law hundreds of times and committed “egregious and widespread misconduct demonstrating a general disregard for the employees’ fundamental rights.” The judge ordered the company to reinstate union workers it unlawfully terminated, pay damages, and reopen stores it had illegally closed as the union movement was rising there. “We are considering all options to obtain further legal review of the administrative law judge’s decision,” Starbucks said in a statement.
The Starbucks union has so far filed more than 500 unfair labor practice charges against the company, and the NLRB has issued 83 complaints covering more than half of these charges. That means the agency investigated and found merit in those complaints, so over time more cases will go in front of NLRB judges, but the company can fight those decisions as well. Starbucks has filed more than 100 unfair labor practice charges, but the NLRB hasn’t found merit in any so far. The process, when a company wishes to fight a union, is long and bureaucratic, and can slow the union effort.
The Buffalo decision is one of 13 such decisions finding that Starbucks illegally tried to thwart the union, through everything from unlawfully interrogating employees in Wisconsin to threatening union employee benefits in Michigan to failing to bargain with its Reserve Roastery workers in Seattle to unlawfully firing union workers in Kansas. Starbucks has maintained that it hasn’t tried to delay bargaining or violated labor law, but these decisions show the federal labor law system has found otherwise.
Schultz’s Senate hearing, for which the company originally tried to sub in a lesser executive to testify instead, will likely make these behaviors more widely known to the American public.
“I look forward to hearing from Mr. Schultz as to when he intends to end his illegal anti-union activities and begin signing fair first contracts with the unions,” Sen. Sanders wrote ahead of the hearing.
But when Sanders asked if Schultz would commit to exchanging proposals with the union within 14 days, the former Starbucks CEO deflected and talked instead about the difficulty of bargaining with individual stores, safety issues faced by management, and not wanting to bargain on Zoom.
Schultz also used the hearing to minimize his involvement in the company’s union strategy, calling it “de minimis.”
The hearing likely had a receptive audience with the public. Some 71 percent of Americans approve of unions, and that number is likely much higher among customers of Starbucks, which has cultivated a progressive brand. Broadcasting Starbucks’ union-busting behavior in front of the public in the Senate hearing could jeopardize the company’s business and could force the company to take a more neutral stance on the union.
“The public supports this, and the public drinks their coffee and eats their food,” Cathy Creighton, director of Cornell University’s Industrial and Labor Relations Buffalo Co-Lab, told Vox. Airing their labor law violations in front of that public, she explained, “will tarnish their brand, and when it tarnishes their brand, it will hurt their bottom dollar, and then they’ll stop doing it. They’re not going to stop doing it unless someone stops them.”
Data from the survey company YouGov found that there’s been a big dip in customers talking about and feeling positive toward Starbucks since the start of the union drive, including a 15 percent drop-off in the last month.
Starbucks’ shareholders are also trying to steer the company away from union busting. On March 23, at its annual shareholder meeting, investors voted in favor — 52 percent — of a proposal to have a third party investigate whether the company violated its commitment to labor laws and to remedy any such violations. The results were released after the Senate hearing March 29.
Jill Fisch, a business law professor at University of Pennsylvania Law School, said a majority vote would likely impact the company’s behavior.
“It’s extremely unlikely that a company would do absolutely nothing if it got majority support,” she said.
The union is also getting support from people who work at Starbucks corporate. Dozens of white-collar employees put out a letter in solidarity with the union earlier this month, calling out the company’s union-busting, among other qualms. Office and store employees alike are hoping they find more support from the company’s new CEO, Laxman Narasimhan, a former PepsiCo executive, who doesn’t have the same history of speaking out against unions as Schultz. As a show of his worker focus, Narasimhan has emphasized the time he spent working at Starbucks stores and manufacturing plants over the last six months, and has vowed to continue working a half-day shift each month at company cafes.
The union welcomed Narasimhan last week with strikes at 100 stores across the country. Picketing union members said that if their stores opened, they were staffed by managers and workers from other stores. They noted that stores opened late, closed early, and had mobile ordering turned off, which means they were bringing in fewer orders than normal.
Such strikes are one of the strongest tools the union has to employ, as they can directly impact the company’s revenue. This was the second strike of its size and could become a more common occurrence if bargaining delays continue.
Union members, while clearly upset at the company’s tactics over the past 15 months, are trying to turn them into fuel rather than failure.
“I think that as a country, we have devalued the importance of our labor so much that companies like Starbucks — billion-dollar companies with billion-dollar executives — are seeing that there is no consequence to their actions,” Maria Flores, a Starbucks barista in New York City who makes $19 an hour, told Vox. “That riles me even more; that makes me want to stay even more and fight for my rights even more.”
Update, March 29, 7:00 pm ET: This story, originally published on March 28, has been updated to include the results of the shareholder vote, released March 29.
Update, March 29, 12:45 am ET: This storyhas been updated to include information about Howard Shultz’s testimony before the Senate HELP committee.
Correction, March 28, 11:15 am ET: A previous version of this story mistakenly referred to Howard Schultz as Starbucks’ founder. He has been CEO three times and is a longtime chair of the company.