Former Starbucks CEO Howard Schultz denied the coffee chain broke labor laws and insisted it is willing to bargain with unionized workers during an appearance before the Senate Health, Education, Labor, and Pensions Committee on Wednesday.
The two-hour hearing saw Schultz face off against Sen. Bernie Sanders, a Vermont Independent and champion of the union movement, who accused Starbucks of waging “the most aggressive and illegal union-busting campaign” in the country’s modern history.
“The fundamental issue we are facing today is whether we have a system of justice that applies to all, or whether billionaires and large corporations can break the law without impunity,” Sanders said.
Schultz denied any wrongdoing and objected to being characterized as a union-buster. He acknowledged that unions have “played an important role in American business” and said they generally have worked on behalf of employees at companies where people are treated unfairly.
“We do not believe we are that kind of company,” he said. “We do nothing nefarious. We put our people first.”
The union conflict started in 2021, when a store in Buffalo, New York became the first to unionize. More than 360 stores across 40 states have held union elections since then, and around 300 company-owned stores have voted to unionize. Under an agreement between the National Labor Relations Board (NLRB) and Starbucks Workers United, the group working to unionize stores, union negotiations must take place on a store-by-store basis.
Starbucks and the union have failed to reach a collective bargaining contract for any of the unionized stores. Both sides blame each other for the stalled negotiations and claim the other side has undermined the process.
Sanders noted that the first group of Starbucks workers to unionize have been waiting more than 460 days to negotiate a first contract. He pressed Schultz to commit to exchanging proposals with the union within 14 days. The former CEO declined to make that promise, but said the company would continue to bargain in good faith through face-to-face sessions, and not through virtual Zoom calls, as requested by the union.
The NLRB has filed more than 80 complaints against Starbucks for violating federal labor laws, including the illegal firing of employees working to form a union and collectively bargain for better pay and benefits. There also have been more than 500 unfair labor practice charges filed against the company.
So far, judges have found Starbucks violated labor laws in at least eight of those cases, which the company is appealing. Last year an administrative judge said the company was guilty of “widespread misconduct demonstrating a general disregard for employees.” When asked about the allegations, Schultz said he’s confident they’ll be proven false.
Democrats on the committee remained unconvinced.
“It is akin to someone who has been ticketed for speeding hundreds of times saying, ‘I’ve never violated the law, because every single time … the cop got it wrong,’” said Sen. Chris Murphy, a Connecticut Democrat. “That would not be a believable contention.”
Jaysin Saxton, a former Starbucks shift supervisor who filed an unfair labor practice charge with the NLRB, testified during the hearing that the company fired him in July after he organized a two-day strike at his store in Georgia, which voted to unionize last spring. He said Starbucks inundated his store with managers who disciplined employees for small infractions prior to the union vote. He also alleged the managers held mandatory meetings where they threatened workers with a loss of benefits if they voted to unionize. After the election, he said seven employees were fired while others had 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,” Saxton said.
Schultz repeatedly refuted accusations that Starbucks broke the law and claimed the company respects workers’ right to unionize.
“Conversely, we have consistently laid out our preference … which is to maintain the direct relationship we’ve had with our employees,” he said.
He pointed out that only 1 percent of the coffee giant’s 250,000 U.S. employees have voted to unionize. He also said the company already provides good wages and benefits, noting that its average starting wage is $17.50.
Sen. Mike Braun, an Indiana Republican, argued that “any large corporation shouldn’t necessarily be bragging about $15 to $20 wages.” Other Republicans on the committee, including Sen. Rand Paul, a Kentucky Republican, defended the company and lauded Schultz’s entrepreneurship.
"I don't want to be part of any witch hunt that vilifies any American business," Paul said. "Count me as one who is ecstatic that Starbucks is an American success story and I'll have no part in trashing their success."
Democrats took a more aggressive tone with their questions. When pressed about why the company has refused to add new benefits like credit card tipping and wage increases, Schultz countered that those benefits are subject to bargaining. He also responded angrily when Democrats commented on the power imbalance between hourly workers and their billionaire CEO, calling the term “billionaire” an unfair moniker.
"I grew up in federally subsidized housing. My parents never owned a home. I came from nothing," Schultz said. "Yes I have billions of dollars. I earned it.”
Schultz stepped down from his third term as Starbucks CEO last week, but he remains a major shareholder and a member of the board. In a shareholder meeting last week, the incoming CEO Laxman Narasimhan signaled there won’t be any changes in the company’s stance on unions. In that same meeting, shareholders narrowly approved a proposal calling for an independent assessment of the company’s commitment to workers’ rights.