Big Starbucks Ruling Gives NLRB Chance to Flex Its Remedy Muscle

Starbucks Corp. and other companies are on notice that, with a sweeping ruling from a judge last week, the National Labor Relations Board is signaling its willingness to ramp up its remedy powers and curb what it sees as employers’ attempts to flout labor law.

Administrative Law Judge Michael Rosas found that Starbucks committed hundreds of labor law violations from the very inception of the Starbucks Workers United campaign to organize stores in 2021. He concluded in a 204-page decision that Starbucks illegally suppressed workers’ rights at 21 stores in western New York by intimidating them, withholding benefits, firing organizers, and closing one store in response to the union campaign.

The judge even ordered the company to bargain with the union at a cafe where workers had voted against unionization. The store near Buffalo, N.Y., was the first location to reject unionization in late 2021 by a 12-8 vote, but SBWU disputed the results, accusing Starbucks of using corporate interrogation and intimidation methods to influence employees’ votes.

The ruling is the culmination of a months-long NLRB investigation and shows that the push to strengthen the agency’s power could gain traction among the board’s judges.

Rosas agreed with SBWU and NLRB attorneys, saying the “repeated and unprecedented” trips made by company executives, including CEO Howard Schultz, to the region made workers believe they were being surveilled. He found that managers cut hours and closed stores to stifle organizers, including one kiosk at a mall in a Buffalo suburb.

“None of this would have occurred in the absence of the Union campaign,” Rosas said, ordering Starbucks to reopen the kiosk.

These orders are “as strong as it gets,” said Benjamin Sachs, a professor of labor and industry at Harvard Law School. He noted the judge’s Gissel bargaining order, named after the US Supreme Court’s 1969 decision in NLRB v. Gissel Packing, which requires a company to negotiate with a union even when the union hasn’t won an election to represent the company’s workers.

“These are muscular remedies that are significant and wholly appropriate in this case. Gissel orders have historically been a thing of theory and not so much practice,” Sachs said. “Under this board, that could change.”

Starbucks CEO Howard Schultz speaks to students at Purdue University’s Fowler Hall on Feb. 7, 2019 in West Lafayette, Ind.

Photographer: Joshua Lott/Getty Images

‘Not Above the Law’

Company managers and executives cracked down on organizers throughout the campaign and fired seven of them in retaliation for their union activities, the judge found. He demanded that Starbucks rehire the seven workers and repay them along with dozens of other workers.

Those remedies follow a move from NLRB General Counsel Jennifer Abruzzo to seek “consequential damages.” She urged regional directors in a 2021 memo to seek compensation for employees who suffered losses as a “direct and foreseeable result” of an employer’s unfair labor practice, including health care expenses or credit card late fees.

The board adopted consequential damages as a potential remedy in its 2022 decision in Thryv, Inc.

Rosas ordered Starbucks to pay workers for damages suffered from managers shortening hours, rejecting promotions, and denying requests to pick up shifts at other stores.

The judge also ordered Schultz and Denise Nelson, vice president of US operations, to record a video of them reading a notice of the ruling and distribute it to all of the company’s employees.

The Starbucks union has certified wins in over 280 stores, but the number of election petitions has dwindled as the union struggles to reach a first contract. Harvard’s Sachs said this remedy could have a great impact with organizers on the ground.

“This is requiring Schultz to say to his workers that, despite what he wants everyone to think, he is not above the law,” he said. “There’s a kind of visceral value in seeing your CEO reading a memo like this.”

Ian Hayes, a partner at Hayes Dolce and one of the union’s lead lawyers, said the decision also gives legitimacy to many of SBWU’s union-busting claims. The union has filed over 600 unfair labor practice charges against the company since the beginning of 2021, according to NLRB data.

“Until today we haven’t had a formal decision maker like a judge weigh in on that and say, ‘You weren’t imagining or misinterpreting this. It’s the company that’s been engaging in delusion and lies this entire time.’ That will be felt by every Starbucks worker in the country,” Hayes said.

What’s Next for Starbucks

A Starbucks spokesperson said the company maintains its innocence in all alleged charges and that the fired workers were terminated because they violated company policies.

“We believe the decision and the remedies ordered are inappropriate given the record in this matter and are considering all options to obtain further legal review,” the spokesperson said.

Starbucks can appeal the judge’s ruling to the full board. But Sachs said he anticipates the Democrat-controlled board will affirm the ALJ ruling and endorse the use of Gissel orders and other strengthened remedies.

This ruling could give unions “a shot in the arm” but should come as a warning to employers, said Isaac Caverly of Polsinelli Law Firm.

“Employers need to be cautious that this NLRB will pursue every remedy it can,” Caverly said. “This is a different era. Companies need to be diligent in analyzing what kind of risks they’re exposing themselves to.”

But the NLRB would have to go to the court to enforce its rulings, Sachs said.

“This is an old-school union-busting playbook that is being employed by new companies,” he said, including Starbucks, Amazon.com Inc., Chipotle Mexican Grill Inc., and Trader Joe’s, all of whom have faced a resurgence in labor organizing in the past year.

“Part of that playbook is that the labor law remedies are so minuscule, so paltry, that these companies have decided it’s worth just paying them so they can avoid the unions,” Sachs said.