Punching In: Starbucks Faces Legal Risks Over DEI Practices

Monday morning musings for workplace watchers.

Missouri AG’s ‘Performance’ DEI Claims| Curtailing Immigration Protections

Khorri Atkinson: Missouri Attorney General Andrew Bailey’s lawsuit alleging that Starbucks Corp.’s diversity practices result in higher prices and longer wait times for services reflects an ideological shift in how DEI initiatives are being viewed and tested in court.

Bailey’s Feb. 11 suit claims the coffee industry giant’s policies and goals to boost racial minorities in retail and corporate positions amount to discriminatory “quotas” in violation of federal and state anti-discrimination laws.

Starbucks’ failure to focus on merit created a workforce that’s “more female and less white,” and led workers to make more “mistakes” than usual, it alleged. Consumers in Missouri have to “pay higher prices and wait longer for goods and services that could be provided for less had Starbucks employed the most qualified workers, regardless of their race, color, sex, or national origin,” it said.

The AG’s claims mirror those of President Donald Trump and critics who’ve blamed DEI for a wide range of societal issues, oftentimes without any concrete evidence, legal observers said.

This “category of claims I would call performance theater,” said Aaron Goldstein, a partner at Dorsey & Whitney. “The claim that people are suffering through longer lines at Starbucks as a result of DEI is pure performance theater.”

“There’s just no legal basis to say Starbucks has an obligation to make sure you get your coffee as fast as possible, and because of the DEI practices, we get to sue you for that,” he added. “That’s the most unfree market economics thing I’ve ever heard.”

These are novel allegations. But Bailey’s case comes amid mounting legal assaults on DEI programs from conservatives, a trend that’s set to intensify as the Trump administration dismantles diversity efforts within the federal workforce and among companies that do business with the government.

Goldstein and other employment law attorneys indicated that Bailey’s broader suit highlights litigation risks companies will now face over their DEI efforts.

Quotas based on protected characteristics are illegal. But “aspirational goals” for legitimate, non-discriminatory business reasons are permissible, as long as employment decisions are not explicitly based on race, gender, and other protected classes, Jonathan Segal, a partner at Duane Morris LLP.

As DEI efforts face increased scrutiny, the line between what’s lawful and illegal is undergoing closer legal examination by the courts, he said.

“Certain practices may not be illegal on their face,” Segal said. But how DEI-related goals aimed at eliminating workplace bias and promoting inclusion are implemented may pose legal risks to the company, he said.

Bailey’s success may depend on internal company materials he can obtain through discovery to support his allegations, provided the case survives a motion to dismiss, Goldstein said.

Signage outside a Starbucks coffee shop in San Francisco on April 28, 2022.

Photographer: David Paul Morris/Bloomberg

Andrew Kreighbaum: The expected loss of deportation protections still looms for foreign workers who benefited from temporary programs targeted by the Trump administration. But plans to rollback Temporary Protected Status are already causing headaches for employers.

The Department of Homeland Security announced this month that it will cut off TPS relief for nearly 350,000 Venezuelans in the US, letting protections expire in April rather than renewing them for another 18 months.

Now employers that have spent recent months sprinting to verify the employment authorization of their workforce are dealing with additional confusion over the status of many employees.

“It creates a record keeping and regulatory compliance nightmare for HR professionals and legal departments,” said immigration attorney Ellen Freeman.

Those challenges will accumulate this year if TPS relief is further reduced as the Trump administration has signaled. Designations for six countries are up for renewal decisions in the first half of this year.

The Venezuelans who face the most immediate threats to protections are among the most highly-educated immigrants in the US. With businesses struggling through a post-pandemic labor crunch, they filled openings for physicians, nurses, and engineers.

“Many are essential workers,” said Jina Krause-Vilmar, CEO at Upwardly Global, which works on reducing employment barriers for immigrants. “They’re in high-skill roles where it’s not easy for us to replace these individuals.”

The termination of benefits is also creating confusion for employers, who aren’t sure what they can legally ask about workers’ immigration status, she said. Many are poring over options to sponsor workers for green cards or employment-based visas. But they’re on a short timeline to do so. The registration period for the H-1B visa lottery, for example, opens in March weeks before TPS protections are set to expire.

A separate TPS designation for several hundred thousand additional Venezuelans will last through September, adding to uncertainty over when relief may expire for some workers.

Terminating protections won’t mean every Venezuelan with protections now will be removed from the country overnight. Many who have been in the US for multiple years already have filed asylum claims, meaning more pressure on already overwhelmed immigration courts. Reopening a pending asylum case would also allow them to renew a work permit—although lapses in authorization are possible.

It’s “going to take a while” to issue notices to immigrants to appear at an immigration court and put them into removal proceedings, said immigration attorney Amy Maldonado. Phone calls and emails from clients came in nonstop after the termination announcement, she said.

“It’s instilling fear in people,” Maldonado said. “Not so much over what’s actually happened than what could happen.”

We’re punching out. Daily Labor Report subscribers please check in for updates during the week, and feel free to reach out to us.