Starbucks' Union Crackdown is Backfiring Spectacularly

• Starbucks has been accused of violating federal laws and illegal retaliation against workers attempting to unionize.
• Its former CEO Howard Schultz has testified before a Senate committee, and Starbucks has previously denied wrongdoing.
• Schultz denied suggestions from Sen. Bernie Sanders "that billionaires and large corporations can break the law with impunity."
• The outcome of the dispute could have a ripple effect across American food workers, experts have told Newsweek.

Since the first Starbucks baristas in Buffalo, New York, voted to unionize in December 2021, the American coffee chain has fought tooth and nail to prevent more of its stores following in their footsteps. Its anti-unionizing efforts, however, have spectacularly backfired, with the company accused of violating federal laws and illegal retaliation against workers attempting to unionize.

It's a fight that could have serious repercussions, not only for Starbucks itself, but for labor relations across the country and for the future of union membership.

Starbucks's former interim CEO Howard Schultz—who's run the company on and off since the 1980s—testified before the Senate's Health, Education, Labor and Pensions (HELP) Committee on Wednesday on the coffee chain's alleged union-busting. Schultz agreed to appear before U.S. lawmakers only after the committee's chair, Sen. Bernie Sanders, called to subpoena the former chief executive, who had previously refused a hearing.

"For months, Starbucks has said that the company respects the rights of workers to organize. The sad fact is that nothing could be further from the truth," Sanders tweeted on Tuesday.

Sanders said during the hearing: "The fundamental issue we are confronting today is whether we have a system of justice that applies to all, or whether billionaires and large corporations can break the law with impunity."

Schultz denied Starbucks had broken labor laws, the Associated Press reported.

"We've done everything that we possibly can to respect the right under the law of our partners' ability to join a union," Schultz said. "But conversely, we have consistently laid out our preference, without breaking any law, of communicating to our people what we believe is our vision for the company."

Two Starbucks workers who say they faced retaliation for organizing with Starbucks Workers United, Maggie Carter and Jaysin Saxton, also testified in front of the committee.

Despite Starbucks' opposition, 285 of its stores have voted to unionize as of late March, according to the National Labor Relations Board (NLRB). Only 57 stores voted against. That's out of a total of about 9,300 U.S. Starbucks stores.

The number of unionized stores now demanding better treatment, fair scheduling practices, and freedom from unfair dismissal and discipline may seem small compared to the totality of Starbucks cafes in the U.S., but it is proving far from a small issue for the coffee chain itself.

Since Schultz returned to the company in April last year for his third stint as CEO, Starbucks has been more aggressive in its efforts to suppress the wave of unionization moving through its stores. Schultz himself—who handed over the company's top job to Laxman Narasimhan only a week before the Senate hearing—has been vocal about his belief that Starbucks workers should not unionize and that most have no reason to do so.

Starbucks has filed over 100 charges against Starbucks Worker United—the upstart union—and the union has made hundreds of unfair labor charges against the company in return, accusing Starbucks of slowing the union's momentum with its reluctance to bargain and the alleged retaliation against unionized workers.

In 13 cases, NLRB has found in the union's favor, accusing Starbucks of illegal union-busting. The company denied violating labor law and said it tried to bargain in good faith. Starbucks denied firing workers to punish them for unionizing, saying that those dismissed were sent home for violating the company's rules, not for being pro-union.

NLRB administrative law judge Michael Rosas said that Starbucks was responsible for "egregious and widespread misconduct" in its handling of its employees' efforts to unionize in Buffalo, New York. The coffee chain's behavior "likely left a lasting impact as to the importance of voting against representation," Rosas said.

Newsweek emailed Starbucks' press team but did not receive a response before publication. In a previous statement to Newsweek, the company denied any wrongdoing in terms of violating labor rights, adding that it's committed to exercising its right to defend itself.

Why Is Starbucks So Hostile Towards its Unions?

"Corporations, particularly in the U.S., will stop at nothing to keep workers from organizing," Kate Bronfenbrenner, director of labor education research and a senior lecturer at Cornell University's School of Industrial and Labor Relations, told Newsweek. "What makes U.S. corporations a little different is there's this culture, this sense that they have a right to manage free from regulation and worker organizing—this is their right, and this is part of the American ethos."

In addition to this widespread anti-union culture, according to Bronfenbrenner, relatively young companies like Starbucks, Amazon, and others "where the original founders are still part of the decision-making process about unions feel like these companies are their babies" and tend to be defensive towards unionizing efforts.

In an interview with CNN in late February, Schultz said that the company didn't want to stop a debate about unionizing, but simply "enter into collective bargaining" in person. The company repeatedly complained about Starbucks Workers United's demand to conduct negotiations on Zoom, something that Bronfenbrenner—and NLRB—said is legal and appropriate.

The year-long impasse over bargaining meetings has prevented the agreeing of a contract between unions and Starbucks, which has in turn has potentially caused unionized workers to miss out on higher wages, improved benefits, and better working conditions.

Schultz has also said that unions are contrary to Starbucks' vision, telling CNN that unions in the U.S. have existed and succeeded "in the past" only because of companies that "did nefarious things on the back of their people." In Schultz's opinion, Starbucks' employees have no reason to unionize because "we provide unprecedented benefits."

That was questioned during the hearing. Sen. Tina Smith, a Minnesota Democrat, said that Starbucks had refused to add new benefits at stories that had unionized. Schultz said that those benefits were subject to bargaining.

"You're a billionaire and they are your employees," Smith said. "The imbalance is extreme."

"I grew up in federally subsidized housing," Schultz replied. "My parents never owned a home. Yes, I have billions of dollars. I earned it. No one gave it to me."

Republicans at Wednesday's hearing also defended Starbucks. They said that it had created millions of jobs, offered competitive benefits, and was being targeted by Democrats to increase union support, the AP reported.

Although union formation is still considered rare in the U.S., the American labor movement has generally been growing since the pandemic, with many across several industries calling for better treatment at work and better pay. But no other unionizing effort has made more headlines than that at Starbucks, where workers have coordinated nationwide strikes aimed at drawing support and attention on the issue of union-busting by the coffee chain.

Only 1.2 percent of American food workers are union members, as reported by Forbes—making Starbucks' unionizing progress quite unique. Their success at Starbucks could have a ripple effect on union membership among Americans.

What Is Likely To Come Out of Schultz's Hearing?

Schultz's hearing in itself is certainly a victory for the union, which in a statement to Newsweek said: "Howard Schultz should be held accountable for directing one of the most flagrant campaigns of federal law breaking against workers in the history of federal labor laws."

The union added: "Starbucks workers play by the rules every day in joining the union by the thousands, and no one is above the law in this country."

Bronfenbrenner agrees that the hearing represents a positive step for the union.

"This would have a psychological effect not just on the Starbucks workers, but also on all workers: that someone like Schultz was forced to go before the Senate will embolden workers and empower them," Bronfenbrenner said. "But there aren't going to be any concrete actions that the Senate can take."

Customers are still going to Starbucks stores, and investors are still investing, the professor said. "There's a point when the campaign will make a difference, when customers will say, 'I'm going to buy from somewhere else,' and investors will say, 'I'm going invest someplace else,' or the union is able to put leverage on a major customer or several major customers or effective supply chain."

Changes for Starbucks will come when "the cost of recognizing the union becomes less than the cost of not recognizing them," Bronfenbrenner said.

But the political and legal environment is currently leaning in Starbucks' favor, Bronfenbrenner added.

"Companies are currently taking advantage of a very aggressive and conservative judiciary that is overturning precedents and issues of civil rights and labor rights. And so appealing a NLRB decision to the courts can be very advantageous for companies because it delays the process for decades, but it could also very well get a decision that reverses long-term precedent on the right to organize," she said.

"We have very weak labor laws where there are no financial penalties, there's no punitive damages. And even if there were financial penalties for companies, for Starbucks or Amazon, you would have to have million dollar fines in order to really hurt them. And no government agency fines millions of dollars for violation of Labor Employment Law."

Update, 3/29/23, 4 p.m. ET: This article was updated with quotes from Wednesday's hearing.