'Starbucks has a problem': Labor experts evaluate increasingly messy union fight
Dani Romero
·Reporter
Sun, August 21, 2022
Asked about Starbucks (SBUX) accusing the National Labor Relations Board (NLRB) of unfairly rigging union elections and seeking a pause in votes, a legal expert stressed that the coffee giant is still dealing with a larger issue at hand: The rapid unionization itself.
"Starbucks has a problem," Rachel Demarest Gold, an employer-side attorney at Abrams Fensterman, LLP, told Yahoo Finance in a phone interview. "By the time a workforce gets to the point where it's in an election for union representation, the company already has a problem and probably has had a problem for a long time with its employees because satisfied workers don't turn to unions."
The union drive at Starbucks stores nationwide began in December 2021 at a store in Buffalo, New York, and more than 310 stores in 36 states have filed for election petitions. Starbucks Workers United, a subsidiary of the Workers United labor union, is leading organization efforts.
According to records from the NLRB, an independent federal labor agency with leaders appointed by President Biden, more than 220 stores have voted in favor of unionization so far.
Starbucks Workers United organizer Richard Bensinger poses for portrait outside a Starbucks in Buffalo, New York, U.S., December 8, 2021.
Starbucks Coffee CEO Howard Schultz watches the New York Yankees take batting practice before a game against the Seattle Mariners at T-Mobile Park on Aug 9, 2022, in Seattle, Washington. (Photo: Joe Nicholson-USA TODAY Sports)
NLRB press secretary Kayla Blado told Yahoo Finance in a statement that while the NLRB "does not comment on open cases," the agency has "well-established processes to raise challenges regarding the handling of both election matters and unfair labor practice cases."
Starbucks Workers United called the letter "absurd" and the allegations an attempt "to distract attention away from their unprecedented anti-union campaign."
The letter from Starbucks counsel requested that the NLRB immediately suspend all Starbucks mail-ballot elections nationwide and asked the board to stay a judgment that ordered Starbucks to reinstate seven workers in Memphis, Tennessee, who were fired earlier this year during an attempt to unionize a store.
The Starbucks letter is not without precedent: After an historic union election victory at a Staten Island warehouse, Amazon (AMZN) by accused the NLRB of inappropriately leading the union to victory by coercing and misleading voters.
According to Matthew Bodie, a former lawyer for the labor board who teaches law at St. Louis University, Starbucks's public letter against the NLRB stands out for the intensity of its rhetoric.
U.S. Senator Bernie Sanders speaks during a unionization rally held by Starbucks Workers United, in Richmond, Virginia, U.S. April 24, 2022.
Dani Romero
·Reporter
Sun, August 21, 2022
Asked about Starbucks (SBUX) accusing the National Labor Relations Board (NLRB) of unfairly rigging union elections and seeking a pause in votes, a legal expert stressed that the coffee giant is still dealing with a larger issue at hand: The rapid unionization itself.
"Starbucks has a problem," Rachel Demarest Gold, an employer-side attorney at Abrams Fensterman, LLP, told Yahoo Finance in a phone interview. "By the time a workforce gets to the point where it's in an election for union representation, the company already has a problem and probably has had a problem for a long time with its employees because satisfied workers don't turn to unions."
The union drive at Starbucks stores nationwide began in December 2021 at a store in Buffalo, New York, and more than 310 stores in 36 states have filed for election petitions. Starbucks Workers United, a subsidiary of the Workers United labor union, is leading organization efforts.
According to records from the NLRB, an independent federal labor agency with leaders appointed by President Biden, more than 220 stores have voted in favor of unionization so far.
Starbucks Workers United organizer Richard Bensinger poses for portrait outside a Starbucks in Buffalo, New York, U.S., December 8, 2021.
REUTERS/Lindsay DeDario
Starbucks has strongly opposed unionization, with CEO Howard Schultz denouncing the "threat of unionization" and rolling out pay increases for store employees that exclude those at unionized stores.
NLRB regional offices have issued nearly 20 unfair labor practice complaints against Starbucks. The agency has also asked a court to halt the company's alleged union-busting campaign.
The coffee giant is now accusing the NLRB of impropriety: On Monday, Starbucks sent a 16-page letter to NLRB officials accusing the agency of managing union elections in a way that unfairly helped workers unionize.
"It's tit for tat," Gold said. "It's an adversarial process. So if I find that you have done something wrong and it helps my case, I'm gonna bring it up."
Starbucks's letter to the NLRB
In the letter, Starbucks alleged that the agency's regional staff repeatedly crossed the line of neutrality during an election in the Kansas City area by secretly coordinating "in-person" voting at the NLRB offices during a "mail-ballot" election, giving union representatives confidential election information, disenfranchising voters that did not cast in-person votes, and mishandling ballots.
“The purpose of this misconduct was to tip-the-scale in order to deliver the outcome sought by the Union," Starbucks general counsel stated in the letter. "The result of the misconduct was to ignore — and bypass — the actual sentiments that Starbucks partners may have expressed in properly conducted elections.”
Starbucks has strongly opposed unionization, with CEO Howard Schultz denouncing the "threat of unionization" and rolling out pay increases for store employees that exclude those at unionized stores.
NLRB regional offices have issued nearly 20 unfair labor practice complaints against Starbucks. The agency has also asked a court to halt the company's alleged union-busting campaign.
The coffee giant is now accusing the NLRB of impropriety: On Monday, Starbucks sent a 16-page letter to NLRB officials accusing the agency of managing union elections in a way that unfairly helped workers unionize.
"It's tit for tat," Gold said. "It's an adversarial process. So if I find that you have done something wrong and it helps my case, I'm gonna bring it up."
Starbucks's letter to the NLRB
In the letter, Starbucks alleged that the agency's regional staff repeatedly crossed the line of neutrality during an election in the Kansas City area by secretly coordinating "in-person" voting at the NLRB offices during a "mail-ballot" election, giving union representatives confidential election information, disenfranchising voters that did not cast in-person votes, and mishandling ballots.
“The purpose of this misconduct was to tip-the-scale in order to deliver the outcome sought by the Union," Starbucks general counsel stated in the letter. "The result of the misconduct was to ignore — and bypass — the actual sentiments that Starbucks partners may have expressed in properly conducted elections.”
Starbucks Coffee CEO Howard Schultz watches the New York Yankees take batting practice before a game against the Seattle Mariners at T-Mobile Park on Aug 9, 2022, in Seattle, Washington. (Photo: Joe Nicholson-USA TODAY Sports)
NLRB press secretary Kayla Blado told Yahoo Finance in a statement that while the NLRB "does not comment on open cases," the agency has "well-established processes to raise challenges regarding the handling of both election matters and unfair labor practice cases."
Starbucks Workers United called the letter "absurd" and the allegations an attempt "to distract attention away from their unprecedented anti-union campaign."
The letter from Starbucks counsel requested that the NLRB immediately suspend all Starbucks mail-ballot elections nationwide and asked the board to stay a judgment that ordered Starbucks to reinstate seven workers in Memphis, Tennessee, who were fired earlier this year during an attempt to unionize a store.
The Starbucks letter is not without precedent: After an historic union election victory at a Staten Island warehouse, Amazon (AMZN) by accused the NLRB of inappropriately leading the union to victory by coercing and misleading voters.
According to Matthew Bodie, a former lawyer for the labor board who teaches law at St. Louis University, Starbucks's public letter against the NLRB stands out for the intensity of its rhetoric.
U.S. Senator Bernie Sanders speaks during a unionization rally held by Starbucks Workers United, in Richmond, Virginia, U.S. April 24, 2022.
REUTERS/Julia Rendleman
The company is "politicizing this by calling for a nationwide moratorium on these elections," Bodie told Yahoo Finance in a phone interview. "I think what they're angling for is to get some Republican lawmakers on board with questioning the integrity of the NLRB."
Bodie added that the ideal scenario for Starbucks "would be if the Republicans would take it either the House and or the Senate, then there'll be hearings about NLRB election integrity and the Republicans will try and make the NLRB seem like a biased organization that can't be trusted."
Hearings based on the accusations are ongoing, with both sides presenting evidence. At some point, Bodie explained, the Hearing Officer "will make her recommendation to the Regional Director of Region 29-Brooklyn, who is handling the case, on whether there should be a new election. The Regional Director will then make a decision on whether there will be a new election or if the results of the election will be certified."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
The company is "politicizing this by calling for a nationwide moratorium on these elections," Bodie told Yahoo Finance in a phone interview. "I think what they're angling for is to get some Republican lawmakers on board with questioning the integrity of the NLRB."
Bodie added that the ideal scenario for Starbucks "would be if the Republicans would take it either the House and or the Senate, then there'll be hearings about NLRB election integrity and the Republicans will try and make the NLRB seem like a biased organization that can't be trusted."
Hearings based on the accusations are ongoing, with both sides presenting evidence. At some point, Bodie explained, the Hearing Officer "will make her recommendation to the Regional Director of Region 29-Brooklyn, who is handling the case, on whether there should be a new election. The Regional Director will then make a decision on whether there will be a new election or if the results of the election will be certified."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
BY ARON SOLOMON
August 15, 2022
Starbucks returning CEO Howard Schultz is shutting down 16 chain locations across the U.S. after workers reported incidents of drug use at certain locations.
LEIGH VOGEL—GETTY IMAGES/THE NEW YORK TIMES
When, four short months ago, I wrote an op-ed about the uncertain future of Starbucks, I honestly would not have predicted that things would implode this quickly.
I imagined that Howard Schultz would return to the company as a faithful caretaker who would do what he historically did best: be a likable leader with a fantastic ability to relate to people.
However, in a mid-July letter to employees, interim CEO Howard Schultz set forth his bold vision of the future. Part of his plan for Starbucks to re-imagine its business is to close locations. Last week, videos of employee walkouts went viral–a massive blow to the company’s reputation.
While Starbucks claims that stores are being closed for safety and security reasons, there is another reality at play: The company is locked in a fight to the finish with a surprisingly resilient nascent employee union movement.
The narrative being woven by Starbucks is one of employee safety. As The Wall Street Journal reported, Starbucks was responding to employee reports of drug use in bathrooms by customers and the general public. Initially, Starbucks informed workers that they could deny bathroom access or reduce store operations for safety in these locations.
The same week that Schultz proclaimed the future, Starbucks announced that 16 locations would be shuttered this month. The company is closing six locations in Seattle, another six in Los Angeles, two in Portland, and one each in Washington and Philadelphia. These stores were not unprofitable–and Starbucks has made it clear that this won’t be the end of the closures.
To a critical eye, Starbucks’ positioning is difficult to believe. While workplace safety needs to always be front of mind, many less-than-deal Starbucks locations haven’t been entirely safe for employees for years. What is new is the intersection of some of these locations and a burgeoning union movement.
It’s a little too convenient to craft a new narrative when these very cities are forming part of the foundation of the Starbucks unionization movement. Two of the stores that will be closing recently voted to unionize. At the same time, in the quaint college town of Ithaca, NY, the Starbucks union claims a store is being closed in retaliation for employees voting to unionize.
As Charlie Cartwright, a lawyer who represents employees injured in the workplace, puts it: “Workplace safety is critically important and should drive corporate decision-making where employees are at risk. At the same time, union-busting takes various forms, including closing business locations where employees have chosen to unionize.”
This also needs to be viewed within the totality of the labor battles at Starbucks over the past few months. Issues range from a complaint alleging that the company threatened to stop gender-affirming health benefits to the NLRB having to urge Starbucks to reinstate three Phoenix workers subjected to unfair labor practices relating to union membership. What started as a series of small battles between Starbucks and employees has escalated into a full-scale war.
To navigate these troubled waters, Starbucks needs the reflective Howard Schultz of this iconic 2010 Harvard Business Review interview. Asked what the most significant challenge he faced after returning to the helm in 2008, Schultz shared this prescient view: “The challenge was how to preserve and enhance the integrity of the only assets we have as a company: our values, our culture and guiding principles, and the reservoir of trust with our people.”
Today, this is Starbucks’ greatest failure. The complete absence of trust between Starbucks employees and management has taken all meaning out of one of Schultz’s most beloved terms: “partners.” That’s what Starbucks’s massive PR machine calls their workers.
Even if Starbucks eventually “wins” by shuttering locations and using every union-busting technique, the company will ultimately lose. The Starbucks culture is irrevocably broken–and for many workers, the greatest irony is that the person in charge of fixing it today is the one who actually broke it.
For those who have watched the company closely for years, this is one of the most incredible failed opportunities in American business history. Culture-building is unbelievably hard, but in building the brand, Starbucks had found ways to build the culture.
The same Starbucks stories that are hollow today were once part of its foundation. The ability for their employees to work their way up the ranks of the business to transform what might have started as a part-time job into a career was part of the neo-American dream. Throw in the opportunity to earn a degree, and Starbucks was on to something.
Until they couldn’t help getting in their own way. One day all of this will be required reading in business schools–but today, it’s a cold brew for Starbucks employees to swallow.
In his HBR interview, Schultz shared a personal and professional revelation he hoped would allow Starbucks to avoid the kind of situation it faces today:
“The decisions we had to make were very difficult, but first there had to be a time when we stood up in front of the entire company as leaders and made almost a confession–that the leadership had failed the 180,000 Starbucks people and their families.”
This would be an excellent idea for the latest incarnation of a Schultz-led Starbucks to re-visit. There never needed to be such a profoundly adversarial relationship between the company and its workers.
Aron Solomon, JD, is the chief legal analyst for Esquire Digital, the editor of Today’s Esquire, and a Pulitzer Prize-nominated writer. He has taught entrepreneurship at McGill University and the University of Pennsylvania and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.
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