Former Starbucks CEO Howard Schultz testifies about the company’s labor and union practices during a Senate Committee on Health, Education, Labor and Pensions hearing on Capitol Hill in Washington, DC, March 29, 2023.
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Former Starbucks CEO Howard Schultz on Wednesday faced a volley of tough questions from Sen. Bernie Sanders about the coffee chain’s alleged union busting.
Schultz stepped down from his post on March 20, handing the reins over to Laxman Narasimhan, who spent the prior six months learning about the company. However, Schultz remains on Starbucks’ board and is its fifth-largest shareholder, with a 1.9% stake in the company he turned into a global juggernaut.
Sanders, a pro-union independent representing Vermont, has been putting pressure on Starbucks for more than a year to recognize the union and negotiate contracts with unionized cafes. He chairs the Senate’s Health, Education, Labor and Pensions Committee, which conducted the panel.
During the hearing on Wednesday, Sanders said that the coffee chain has engaged in the “most aggressive and illegal union-busting campaign in the modern history of our country.” He also accused the company of stalling on collective bargaining agreements, betting that workers will give up and leave the coffee chain.
Nearly 300 Starbucks cafes have voted to unionize under Starbucks Workers United, according to data from the National Labor Relations Board. In total, the union has made more than 500 complaints of unfair labor practices related to Starbucks with the federal labor board. Judges have found that the company has broken federal labor law 130 times. (Starbucks has filed roughly 100 of its own complaints against the union.)
None of the unionized stores have agreed on a contract yet with Starbucks. An NLRB lawyer reportedly said Tuesday that the company’s refusal to bargain over Zoom was illegal.
In response, Schultz defended Starbucks’ approach to its negotiations, maintaining that a direct relationship with workers is what is best for the company. He also denied multiple times that the company ever broke federal labor law and said his focus during his time as interim CEO was 99% on operations, not battling the union.
Schultz’s third stint as CEO of Starbucks lasted just two weeks shy of a year, but in that time he moved aggressively to stem the organizing wave that began under his predecessor, Kevin Johnson. Schultz announced higher wages, better benefits and card tipping for non-union locations as well as a reinvention plan that included automating tasks that baristas found tedious.
Chairman Sen. Bernie Sanders, I-Vt., prepares to gavel to order the Senate Health, Education, Labor and Pensions Committee hearing on No Company is Above the Law: The Need to End Illegal Union Busting at Starbucks in the Dirksen Senate Office Building on Wednesday, March 29, 2023.
Bill Clark | Cq-roll Call, Inc. | Getty Images
At times, the questioning turned personal. Sanders referred to Schultz multiples times as a billionaire, which Schultz tried to rebut by highlighting his childhood growing up in a government housing project and downplaying his personal wealth. Sen. Ed Markey of Massachusetts returned to the story Schultz told during his prepared testimony about his father, who lost his job after an injury, saying that a union could’ve stopped his dismissal.
“These workers are just like your father, and they have no rights,” Markey told Schultz.
“You bring up my father. You don’t understand, sir,” Schultz responded.
Schultz’s answers to other senators often ran long, leading Sanders to cut him off to move onto the next speaker, ratcheting up tension inside the chamber.
As Starbucks comes under fire from Democrats, the coffee chain has found allies on the right. Last week, House Republicans issued a subpoena to the NLRB seeking documents and alleging misconduct by the agency’s officials in connection with a Starbucks union election in Kansas.
Sen. Bill Cassidy, a Republican representing Louisiana, called Wednesday’s hearing a “smear campaign against a company and an individual.” He accused the NLRB of breaking laws to advance a political agenda but also said he wasn’t there to defend Starbucks. Schultz declined to answer Cassidy’s question about whether he believes the NLRB’s actions are politically motivated.
Schultz received more vocal support from other Republican senators, including Mitt Romney of Utah, who acknowledged the irony of a non-coffee drinking Mormon supporting the former Democratic presidential hopeful.
In Sanders’ prepared comments, he said Schultz only appeared because of the threat of a subpoena.
In early March, Schultz declined an invitation from the committee to testify about the company’s handling of the union push. After Sanders called for a vote on whether to subpoena Schultz, the former chief executive agreed to appear in front of the panel.
Beyond lawmakers and regulators, Starbucks also has faced pressure for its handling of the union push from investors. At the company’s annual meeting on Thursday, shareholders cast their votes for a nonbinding proposal that asked for a third-party probe into whether the company broke its commitment to workers’ rights. Starbucks hasn’t shared the official vote counts yet.
— CNBC’s Kate Rogers contributed to this report.
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