Howard Schultz Doesn’t Think Starbucks Has Done Anything Wrong

Yesterday, former CEO and current board member of Starbucks, Howard Schultz, finally testified in front of the Senate Health, Education, Labor and Pensions (HELP) Committee regarding the company’s treatment of unionizing workers. The hearing was much anticipated, especially after Schultz only agreed to testify under the threat of a subpoena from HELP Committee chair and Vermont Sen. Bernie Sanders, who titled the hearing “No Company is Above the Law: The Need to End Illegal Union Busting at Starbucks.”

Though some may view Sanders’s characterization of Starbucks as hyperbolic, workers and government officials have accused the company of engaging in union-busting behavior since the first store unionized in 2021. On March 1, a National Labor Relations Board (NLRB) judge issued a decision that Starbucks had violated the National Labor Relations Act (NLRA) “hundreds of times,” and engaged in “egregious and widespread misconduct demonstrating a general disregard for the employees’ fundamental rights.” Starbucks was ordered to, among other things, reinstate unlawfully fired workers and post a notice to all employees that Starbucks had violated labor law and that workers have a right to unionize. Starbucks is appealing this ruling.

Wednesday’s hearing was part of HELP’s investigation into federal labor law but also served as a public reckoning for Starbucks, while Sanders pushed Schultz to commit the company to exchanging contract proposals with Starbucks Workers United within 14 days. Following the hearing, Starbucks Workers United announced that the company’s shareholders had voted to conduct a “third-party review” of Starbucks’s labor practices. In response to the vote, the company said that it was in the process of “undertaking an independent, third-party human rights impact assessment, which will include a deeper-level review of the principles of freedom of association and the right to collective bargaining,” according to Reuters.

While being grilled at the hearing by Sanders and his Democratic colleagues, Schultz insisted that Starbucks has done nothing wrong regarding federal labor law. He repeatedly referred to NLRB findings as “allegations” and insisted that “Starbucks has not broken the law.” Schultz took umbrage at Sanders’s (accurate) characterization of him as a billionaire, describing the label as “unfair.” “Yes, I have billions of dollars,” Schultz said. “I earned it, no one gave it to me, and I shared it with the people of Starbucks.”

Schultz stepped down as CEO of Starbucks on March 20, two weeks earlier than he had initially announced and shortly after agreeing to testify. He was replaced by Laxman Narasinham, whom workers addressed during a panel after Schultz’s testimony, during which they countered Schultz’s claims that Starbucks is a fair and caring employer. “To Starbucks’ new CEO, Laxman Narasinham, you have an opportunity to chart a different course,” said barista Maggie Carter, “to truly make Starbucks the ‘different kind of company’ Schultz promised, but failed, epically, to produce.”

Schultz testified that Starbucks “has not broken the law”

Schultz, who began working at Starbucks in 1982, opened his testimony by painting a picture of Starbucks as a company founded on respect for workers, noting the starting wage is $17.50 an hour, and that Starbucks has a history of providing good benefits. Multiple times, he invoked his veteran father sustaining a workplace injury as his inspiration to make a company that treats workers well.

While being questioned, Schultz repeatedly insisted he understood workers have a constitutional right to organize, but when asked by Sanders whether he was aware that an NLRB judge had found Starbucks had violated labor law, he said “Starbucks has not broken the law,” and later said he was “aware that those are allegations and Congress has created a process that we are following, and we are confident that those allegations will be proven false.” When asked whether he was prepared to follow the NLRB judge’s orders to make a notice and video informing Starbucks workers of their rights and acknowledging that Starbucks had violated those rights, he said “No, I am not, because Starbucks Coffee Company did not break the law.”

Schultz also initially insisted he was following the law when questioned about Starbucks withholding wages and benefits from unionized workers, saying, “my understanding when we created the benefits in May ... was under the law we did not have the unilateral right to provide those benefits to employees who were interested in joining a union.” He later clarified that he believed new benefits were subject to bargaining at union stores.

Minnesota Sen. Tina Smith pointed out that Starbucks Workers United explicitly waived its right to bargain over new benefits (which Starbucks Workers United confirmed on Twitter) and said regarding Schultz’s insistence on his interpretation of the law, “I just think you’re wrong.” Schultz then changed his argument, saying “it would not be proper” to separate out certain bargaining issues, and that “it is our preference and our right to negotiate that contract ... not in piecemeal.”

Overall, Schultz maintained that the union is an impediment to maintaining a “direct relationship” with employees, and that while unions were great tools at companies where people are not treated fairly, “I do not believe we are that kind of company. We make decisions based on our people. Starbucks doesn’t need a union.”

Smith noted this pattern and said, “honestly, it sounds as if you are personally offended or even insulted that anyone would question you or your company. And it seems that you feel only bad companies should be unionized ... and that Starbucks doesn’t need a union because you are a good company. But I think, Mr. Schultz, that that is not your decision to make.”

Photo by Anna Moneymaker/Getty Images

Workers’ testimony described union busting and issues with benefits

Shortly after Schultz finished testifying, Sanders welcomed a panel of witnesses that included Maggie Carter, a current barista working at a Knoxville, Tennessee, Starbucks, and Jason Saxton, a former shift supervisor who alleges that he was illegally fired by Starbucks over his involvement in the union effort. In her testimony, Carter said that she started working at Starbucks because the company promised health insurance for both her and her son, but that she’d recently lost those benefits after the company cut her hours. Starbucks offers benefits to workers who work a minimum of 20 hours per week, and Carter says that she has been regularly scheduled to work less than that, which meant she was no longer eligible to stay on the company’s benefit plans. And even if she had been eligible for one of Starbucks’s benefit plans, Carter said that she may not have been able to afford to keep her insurance. “Rather than forgo a paycheck, we go without health insurance,” she said.

Saxton testified that the benefits Starbucks offers to its employees are “subpar,” and that he, a disabled veteran, was forced to seek out health care at Veterans Administration hospitals when his Starbucks health insurance wouldn’t pay certain costs. He also alleged that he was later fired by Starbucks for being “disruptive” after he led a two-day strike at his store in Augusta, Georgia, and has filed an unfair labor practice charge with the NLRB contesting his firing. “We are coming together to demand better pay, affordable health coverage, and stronger safety procedures,” he said. “I’m proud to be a leader of this new labor movement. We’re taking on corporate power and fighting for all of us.”

Both Saxton and Carter spoke about Starbucks’s handling of the union drive, and cited a wide range of behavior that they described as union busting, including management allegedly listening in to workers’ conversations via the headsets they use to take orders and firing more than 20 workers who supported the union. When asked by Smith how she felt about Schultz’s insistence that the company wanted to deal with its partners “directly,” and not through a union, Carter was unequivocal: “Howard Schultz does not feel like a partner to me.” As they testified, the room was packed with supporters, many of whom were wearing Starbucks Workers United T-shirts.

An anonymous whistleblower alleged NLRB collusion

In addition to the testimony from Carter and Saxton, HELP Committee co-chair Bill Cassidy, a Louisiana Republican, invited former representative and attorney Bradley Byrne to testify on behalf of an anonymous NLRB whistleblower who alleges “significant irregularities” with one Starbucks union election process that call into question the agency’s neutrality. Byrne argued that the decision unfairly favored the union, and influenced the outcome of an election at one store in Overland Park, Kansas.

“The law protects the workers, not the company or the union or the NLRB,” Byrne said. “If you do something that challenges the integrity of the process, you’ve challenged the integrity of the vote. If you’ve challenged the integrity of the vote, you’ve challenged the integrity of the entire system.”

The investigation into the whistleblower’s allegations is still ongoing, and per Reuters, House Republicans have subpoenaed documents that they think might prove misconduct at the agency. “The NLRB was established to function as an impartial agency that conducts representation elections and adjudicates disputes fairly under the National Labor Relations Act, not as a rogue organization that puts its thumb on the scale to sway politically motivated outcomes,” House Committee on Education & the Workforce chair Rep. Virginia Foxx said in a statement. “Rest assured, the Committee is committed to shining light on these allegations to uncover the truth of what’s really going behind closed doors at the NLRB.”

What it all means for Starbucks

During Schultz’s testimony, Massachusetts Sen. Ed Markey told Schultz, “The American people are watching ... I see you squeezing the people who have made you rich with blatant disregard for the law.” The hearing did feel like a rare reckoning in a country that treats corporations as people and has done much to squelch the labor movement, laying out consequences for major companies that have often flouted labor law with little repercussion. And given that at least one Starbucks location filed a petition to unionize during Schultz’s testimony, it is clear that the organizing push is continuing.

Along with the impact that these hearings will have on the unionization effort at Starbucks, this hearing also marks one of the first real times that Congress has been able to point the attention of the American public at labor issues. While Sanders and Schultz were sparring over whether or not Starbucks has engaged in union busting, the public got to watch as one of the country’s most influential CEOs was taken to task for behavior that many believe is unethical, and often outright illegal. Via YouTube and Facebook and Twitter, thousands of Americans tuned in to watch as elected officials actually took aim at corporate greed.

On some level, these hearings were largely just congressional theater, with no binding implications for Starbucks, but they were not without benefit. Even though Sanders was not able to get Schultz to commit to trading contract proposals with Starbucks Workers United within 14 days, these hearings will likely have a real energizing effect on the unionization effort, and perhaps the movement more broadly. Schultz isn’t even the CEO of Starbucks anymore, but he did offer a major insight into how the company will approach union elections across the company in the coming months. Moving forward, it’s all but assured that Starbucks will continue to maintain its anti-union position, even though the workers have demonstrated via more than 280 successful union elections that this is a fight Starbucks will likely lose.