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Both Howard Schultz and employees of Starbucks answered questions posed by bipartisan members of the committee during the packed hearing entitled, No Company is Above the Law: The Need to End Illegal Union Busting at Starbucks.

Howard Schultz defended against allegations of union-busting in heated Senate hearing

Former Starbucks CEO Howard Schultz defended over and over that his company has not broken the law

Howard Schultz — current board chairman and former CEO of Starbucks — defended allegations of union-busting against the Seattle-based coffee giant during a three-hour-long U.S. Senate Health, Education, Labor, and Pensions committee hearing led by Senator Bernie Sanders (I-Vt.) Wednesday. Both Howard Schultz and employees of Starbucks answered questions posed by bipartisan members of the committee during the packed hearing entitled, No Company is Above the Law: The Need to End Illegal Union Busting at Starbucks.

The Senate hearing came about after weeks of negotiations between the Senate committee and Starbucks, which initially tried to send someone other than Howard Schultz, who was only interim CEO during a portion of the now 16-month-long clash with Starbucks Workers United. However, Sen. Sanders refused to accept anyone testifying other than Schultz and, under threat of subpoena, he eventually agreed to testify Wednesday.

Throughout the hearing, Schultz defended his company, stating over and over that Starbucks never broke the law — specifically the National Labor Relations Act — for which the coffee chain has come under fire for allegations of union-busting including illegal terminations of employees.

Here are seven highlights from the lengthy testimony:

Schultz defended Starbucks against every allegation of union-busting

Throughout the testimony, former CEO Howard Schultz maintained that Starbucks never broke any aspect of the law, and that the allegations of union-busting were either false or a misinterpretation of a corporation’s right to express a preference regarding unionization to their employees:

“Each person at Starbucks has the right under the law to decide whether or not they want to join a union,” Schultz said during Wednesday’s testimony. “And Starbucks Coffee Company also has the legal right to provide a vision for our employees, which currently represent 99% of the 250,000 who wear the green apron, that our vision is a preference to maintain our direct relationship.”

In the case of the “Memphis Seven” — the employees who were allegedly let go due to their union activity and were reinstated in their jobs as per a court order — Schultz said that one of the employees was initially fired due to safety violations when the employees in question reopened a store that had been closed for the day.  

“We can't be held accountable for things that we believe under the procedures of Starbucks are based on safety for our people, and that is a clear violation of our procedures,” Schultz said.

Starbucks has a reason why union contracts have not been negotiated

In his testimony, Schultz maintained that the only reason that they have not attempted to bargain more or come to an agreement with any of the unionized stores (none of which have yet ratified a union contract), is because Starbucks Workers United insists on meeting over Zoom instead of in person, which the company has declined to do.

“We have met over 85 times for a single store,” Schultz said. “We've tried to arrange over 350 separate meetings. […] We believe that face-to-face negotiations are the way to proceed. There have been safety issues in which Starbucks managers have been outed on social media. There are privacy issues. We don't want to do it on Zoom. We are prepared to meet face-to-face.”

According to the National Labor Relations Act, “It is an unfair labor practice for either party to refuse to bargain collectively with the other, but parties are not compelled to reach agreement or make concessions.”

Howard Schultz admitted that ‘it could be interpreted’ that the company has tried to dissuade employees from unionizing

In a line of questioning at the start of the hearing Sen. Bernie Sanders asked Schultz if he was ever involved in a decision to fire or discipline a worker in any way for forming union, and Schultz said he was not. However, when asked if he had “threatened or coerced or intimidated a worker for supporting a union” he said that he had conversations that could have been interpreted a different way than he intended.

It is likely Schultz is referring to the comment caught on tape where Schultz is seen telling a worker during a closed-door meeting with employees, “if you hate Starbucks so much, why don’t you go work somewhere else?”

“A Starbucks partner was trying to interrupt the meeting, and start talking about the union,” Schultz extrapolated during the hearing. “I didn't know she was recording it, but it was clear that there was a disruptive mentality. […] It was not a threat. I can understand she may have misinterpreted what I said.”

Starbucks is not willfully withholding benefits from unionized stores

One of the biggest themes throughout Wednesday’s line of questioning was unfair treatment of unionized stores and workers, who claim that they are having hours taken away from them, having credit card tipping taken away from them (which began rolling out to stores in Sept. 2022), and are being threatened with having their benefits and company protections revoked from unionization activity.

“When we created the benefits in May, one month after I returned to CEO, my understanding was under the law, we did not have the unilateral right to provide those benefits to employees who were interested in joining a union,” Schultz said.

Schultz is referring to the National Labor Relations Act, which stipulates that employers may not “make changes in wages, hours, working conditions, or other mandatory subjects of bargaining before negotiating with the union to agreement or overall impasse,” unless the union prevents the parties from reaching agreement or impasse, there are extenuating economic circumstances, or the proposed change is a smaller, recurring item like an annual wage review.

“You have said that you cannot legally provide these benefits without bargaining over them, but the union has specifically stated in this letter, July 15, 2022, that they waived any objection to bargaining on this,” Sen. Tina Smith (D-Minn.) said referring to the wage raise Starbucks passed in May 2022, but were allegedly unable to offer to unionized stores. “The letter says that the union hereby waives any objection that we might have to Starbucks providing union representative employees with any wage or benefit improvements provided to unrepresented employees.”

According to Schultz, Starbucks did not feel a written waiver that would allow the company to raise wages for unionized employees was not proper:

“There are an array of wages and benefits, and it would not be proper to take one piece of the puzzle out of the negotiating process,” he said. “It is our preference and our right to negotiate that contract fairly and objectively, but not in piecemeal.”

The first Starbucks union activist was employed by Workers United

According to Howard Schultz, one fact that keeps getting swept under the rug during the investigations into the allegations of union-busting is the apparent bias and manipulation tactics held and employed by both the Starbucks Union representatives, Workers United, and the National Labor Relations Board.

According to Schultz, one of the early organizers of the first union in Buffalo, N.Y. was being paid by Workers United to organize Starbucks stores. This allegation is corroborated by both Starbucks and Workers United, who have stated that Jaz Brisack — a 24-year-old Rhodes Scholar and one of the lead organizers of the first unionized Starbucks in Buffalo, N.Y. in Dec. 2021 — was paid a salary by Workers United.   

Schultz also reminded the Congressional committee that the National Labor Relations Board is also being investigated for four separate allegations of employee interference in Starbucks union elections, compared with the several hundred allegations issued against Starbucks.

Are tax payers subsidizing union busting?

During the hearing, Sen. Bob Casey (D-Penn.) accused Starbucks of allowing taxpayers to indirectly subsidize Starbucks’ alleged union-busting practices.

“In 2021, Starbucks shut down all stores in the Buffalo area, rented out the Hyatt Regency Hotel, flew Mr. Schultz and Starbucks senior executives into town and forced workers to hear you give anti-union talking points,” Casey said. “While Starbucks refuses to say how much they've spent on anti-union efforts […] under current IRS law, Starbucks is able to write off those costs as a run-of-the-mill business expense, meaning taxpayers are subsidizing union-busting in the United States.”

Throughout the hearing, Schultz clashed with members of the HELP committee, particularly with ranking Democrat Senators. Schultz even took issue with the fact that Senators called him out for being a billionaire:

“I grew up in federally subsidized housing; my parents never owned a home; I came from nothing,” Schultz said. “I thought my entire life was based on the achievement of the American dream. Yes, I have billions of dollars. I earned it. No one gave it to me. And I've shared it, with the people at Starbucks. And so anyone who keeps labeling this billionaire thing is […] unfair.”

Contact Joanna at [email protected]

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