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Starbucks' ex-CEO Schultz resists 'union busting' claims by U.S. Senators

Published 03/29/2023, 11:09 AM
Updated 03/29/2023, 09:22 PM
© Reuters. FILE PHOTO: Starbucks Chairman and CEO Howard Schultz looks on during its Annual Meeting of Shareholders in Seattle, Washington March 21, 2012. REUTERS/Robert Sorbo/File Photo

By David Shepardson and Hilary Russ

WASHINGTON/NEW YORK (Reuters) -Starbucks' former Chief Executive Howard Schultz defended himself and the coffee chain against allegations of "union busting" at a U.S. Senate committee hearing in Washington on Wednesday.

The Seattle-based company has previously denied allegations that it illegally fired pro-union baristas or spied on workers as hundreds of U.S. stores organized unions starting in late 2021.

It also says it did not violate federal labor law by offering some new benefits - including higher wages, student loan repayment tools, and a savings account program - only to non-unionized stores, as the National Labor Relations Board (NLRB) has alleged.

Senator Bernie Sanders, chair of the Senate Health, Education, Labor, and Pensions Committee, told Schultz that "Starbucks (NASDAQ:SBUX) has waged the most aggressive and illegal union busting campaign in the modern history of our country."

"These are allegations and Starbucks has not broken the law," Schultz told Sanders during the hearing.

Starbucks' shares closed up 1.93% at $100.62 as restaurant stocks ended broadly higher. Analysts at two Wall Street firms, TD Cowen and BTIG, reiterated their high ratings for the company and said respectively that the hearing was a "non-event" and "accomplished little."

Schultz, who left his third stint as CEO on March 20, said he did not have any direct role in firing workers who supported the union or closing unionized stores. He remains on the company's board.

His return to Starbucks as its interim leader in April 2022 was "95% focused on the operations of the business" and his involvement in the company's union strategy has been "de minimis," Schultz said.

Republicans defended Schultz, praising the company's competitive wages, health benefits, employee stock purchase program and other benefits.

Republican Senator Mitt Romney noted "some irony to a non-coffee-drinking Mormon conservative defending a Democrat candidate for president in perhaps one of the most liberal companies in America."

Other senators questioned why it was taking so long for Starbucks to reach contracts with its stores in Buffalo, New York, which were the first in the United States to unionize.

"The delay is truly unacceptable," Senator Maggie Hassan said.

But the company and union disagree over whether negotiation sessions can be conducted via Zoom video calls.

© Reuters. Former Starbucks CEO Howard Schultz drinks from a Starbucks mug while testifying before a Senate Health, Education, Labor, and Pensions Committee hearing to answer questions about the company's compliance with labor law on Capitol Hill in Washington., U.S., March 29, 2023. REUTERS/Julia Nikhinson

Schultz reiterated that the company has "shown up about 85 times to have a face-to-face meeting" and tried to set up 365 additional meetings.

"We are ready and able to have face-to-face negotiations, and will do so at a moment's notice," he said.

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