Howard Schultz Says Starbucks 'Unequivocally Has Not Broken The Law' At Union-Busting Hearing

Former Starbucks CEO Howard Schultz traded barbs with Senator Bernie Sanders and other Democratic lawmakers on Wednesday at a congressional hearing on allegations of union-busting at the coffee chain.

Sanders, an independent from Vermont, opened the hearing by stating, "Starbucks has become the most aggressive union-busting company in America," an assertion Schultz immediately refuted.

"Starbucks coffee company, unequivocally, has not broken the law," Schultz said at a hearing before the Senate Health, Education, Labor and Pensions Committee.

Sanders has been calling for months for Schultz to publicly respond to worker complaints, even threatening to subpoena the executive after Starbucks tried to send a subordinate in his stead.

Since the first Starbucks store voted to unionize in late 2022, nearly 300 Starbucks stores have taken that step, although none has negotiated a collective-bargaining contract and the company has closed some pro-union stores. Judges have ruled that Starbucks repeatedly broke labor laws, including by firing pro-union workers, interrogating them, threatening to rescind benefits if employees organized and threatening to call the police on a worker, according to a spokesperson from the National Labor Relations Board.

Schultz continued to call these findings "allegations," reiterating the company's previous position that until it exhausts all legal channels, including potentially appealing up to the Supreme Court, these judicial decisions are not final.

"These are allegations. These will be proven not true," Schultz said.

Earlier this month, a judge found that Starbucks engaged in "egregious and widespread misconduct demonstrating a general disregard for the employees' fundamental rights," ordering Schultz to personally read the employees a recitation of their rights under the law. The company has faced more than 500 complaints of unfair labor practices filed by workers and labor officials, according to the NLRB.

On Wednesday, Schultz told Sanders he would not do the reading, reiterating that the company would continue its legal appeals. 

Schultz blames union for slowing talks

Schultz said Starbucks has tried to negotiate with unionized stores but has been thwarted by unnamed pro-union individuals.

"We have been arranging more than 350 bargaining sessions," Schultz said in prepared testimony, noting that Starbucks officials have physically attended 85 sessions. "However, union representatives have improperly demanded multi-store negotiations, delayed or refused to attend meetings, and insisted on unlawful preconditions such as 'virtual' bargaining and participation by outside observers, among other things," he said. 

Starbucks spokesman Andrew Trull said the company opposed "hybrid" bargaining sessions because it did not want negotiations recorded or transcribed, which "undermines important and personal conversations related to the unique needs of our partners at each store," he said in an email.

"The NLRB has always prohibited any party from requiring recordings or transcripts of contract negotiations, as this inhibits the free and open discussion necessary to successfully bargain," Trull said.

Schultz repeatedly highlighted benefits Starbucks offers to employees, including paid sick leave, paid parental leave, some child care benefits, a paid-for online college degree and, added in the past year, a minimum wage of $15 an hour at company stores and the option for customers to tip on credit-card orders. 

Schultz said Starbucks' average starting was was $17.50, pointing out that it was higher than any state's minimum wage. That earned him a rebuke from Indiana Republican Mike Braun.

"Even $17 an hour is not a living wage in this day and age," Braun said. "Any large corporation shouldn't necessarily be bragging about $15 to $20 wages."

Charges of retaliation

Some senators pressed Schultz on why Starbucks has rolled out credit-card tipping — a key demand of pro-union workers — only in stores that were not represented by a union. The NLRB filed a complaint this week alleging that Starbucks illegally withheld these benefits from union workers. The labor board previously charged that Starbucks broke the law when it raised pay and benefits for non-unionized stores only.

Schultz countered that he believed labor law forbade the company from offering higher pay to the unionized stores, but he did not indicate it would reverse its position.

Other senators praised Schultz for the company's success. Sen. Rand Paul, a Kentucky Republican, said that while his family prefers Maxwell House coffee, Starbucks deserves respect.

"The hearing today is convened to attack a private company for its success," Paul said.

Worker organizers testifying after Schultz highlighted the power imbalance between Starbucks and its employees, and listed examples of retaliation. Jaysin Saxton, a disabled U.S. Coast Guard veteran and former Starbucks shift supervisor, testified that the company fired him in July after he led a two-day strike at his Augusta, Georgia, store, which voted to unionize last spring. Saxton has filed unfair labor practice charges with the NLRB.

Prior to the union vote, Saxton said Starbucks flooded the store with managers who disciplined employees for minor violations and held required meetings where they threatened employees with a loss of benefits if they voted to unionize. After the union vote, he said, seven workers were fired and others at the store saw their hours cut.

"Starbucks and big corporations have a lot of power and money and they are willing to pull out all the stops to deny workers a voice and a seat at the table," he said.

Sharon Block, a Harvard Law professor, testified that if Starbucks is not held accountable for its conduct, workers across industries will see that "their rights are as disposable as a paper Starbucks cup."

New CEO, same approach

Schultz, who resigned early from his stint as Starbucks CEO, has served three terms at the helm of the company. According to Politico, when Schultz first bought out the coffee chain in 1987, he inherited a unionized workforce at the shop's roasting plant and store — those workers had secured health care coverage for part-timers, a Starbucks benefit that Schultz often touts. After his takeover, Schultz pushed for major concessions from the workers and was instrumental in the move to de-certify the union, Politico reported. 

When the New York Times' Andrew Ross Sorkin asked Schultz last year if he could ever accept a union at Starbucks, the CEO answered quickly, "No."

Starbucks' anti-union stance appears set to continue under the company's new CEO, Laxman Narasimhan, who took over leadership of the company March 20 when Schultz resigned.

"I continue to believe a direct relationship with our partners is the best way forward," Narasimhan told The Associated Press last week.

Still, the company could face some internal pressure to improve its labor relations. Late Wednesday, Starbucks said its shareholders had approved a measure calling for an independent assessment of the company's commitment to workers' rights. Fifty-two percent of those voting favored the measure.

With reporting by CBS News' Nikole Killion and The Associated Press.

First published on March 28, 2023 / 6:52 PM

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