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Starbucks CEO’s Anti-Union Comments Straddle Line of Legality

June 14, 2022, 3:38 PM

Starbucks Corp. CEO Howard Schultz’s disparaging comments about workers’ organizing efforts escalated a lengthy battle with employees who have unionized at 150 stores nationwide.

Workers United alleges Schultz’s recent interview with New York Times reporter Andrew Ross Sorkin demonstrates the company won’t bargain in good faith with unionized employees. It’s the fourth time the union has filed a charge with labor regulators over the Starbucks chief’s statements.

Schultz in the interview said Starbucks will never accept the union, and that unionizing will cause the company to lose business, the union said in its filing.

Public comments like Schultz’s present a legal minefield, as the National Labor Relations Board has found executives’ statements alone to be labor law violations. At the very least, the union could use those comments as fodder for later allegations of bad faith if negotiations fall apart.

“When employers speak, particularly when it’s a billionaire celebrity CEO, their words can carry particular weight,” the union’s attorney, Gabe Frumkin of Barnard Iglitzin & Lavitt LLP, told Bloomberg Law.

In the interview, Schultz said that the company needed to “reinvent the role and responsibility of our company.” He said that “we have to customize new benefits and we have to demonstrate to our people they can trust us.”

“Could you ever see doing that and embracing the union as part of it?” Sorkin asked.

Schultz responded: “No.”

Referring to the union as a “third party,” Schultz also said “the customer experience will be significantly challenged and less than if a third party is integrated into our business.”

The NLRB has received nearly 200 charges accusing Starbucks of violating federal labor law since the union started filing petitions for elections last August. Agency prosecutors have issued eight complaints covering about 50 charges related to the ongoing union wave, including a sprawling case that accuses the company’s North American President Rossann Williams of unfair labor practices.

A formal agency complaint against Starbucks based on Schultz’s comments would focus even more public attention on the company’s response to unionization, both in its treatment of workers and its contract negotiations with the union.

A Starbucks spokeswoman said Schultz was just stating that he has a different view than the union. He thinks the company and its workers can accomplish more “by working side by side rather than across the negotiating table,” the spokeswoman said.

Starbucks is committed to collective bargaining, which has already started at several stores, she said.

Part of a Pattern

NLRB watchers held a range of views on whether the Starbucks CEO’s comments clearly crossed the line between merely expressing a view that’s different from the union to violating federal labor law.

In his interview, Schultz essentially said he won’t work with the union on benefits, which is a mandatory subject of bargaining under the National Labor Relations Act, said Anne Lofaso, a labor law professor at West Virginia University.

“This is a textbook case,” said Lofaso, a former NLRB attorney. “It’s a core violation of the act when an employer suggests something could be futile.”

Former NLRB member Sharon Block wasn’t certain that Schultz’s comments themselves constituted an independent labor law violation, but said that it wouldn’t surprise her if agency prosecutors hit Starbucks with a complaint based on them.

Schultz wasn’t making off-hand comments about the union, nor did he couch it in any mitigating language to soften his position, said Block, now a law professor who heads Harvard Law School’s Labor and Worklife Program. His statements were part of a pattern, and he holds the power to make his threats come true, she said.

Workers United previously has accused Schultz of threatening a worker during a company forum, threatening to withhold benefits to from workers who are organizing or who are already represented by the union, promising benefits to employees who do not organize, and saying a union contract wouldn’t improve working conditions.

Not a ‘Slam Dunk’

But Schultz’s comments aren’t a “slam dunk” labor law violation, so the NLRB general counsel’s office will need to look at the context of the statement and the extent that it would chill workers’ organizing efforts, said Mark Gaston Pearce, who led the NLRB during the Obama administration.

Making statements during a public interview with a journalist may not cross the same lines as they would if delivered directly to workers during a captive audience meeting, said Pearce, who directs the Workers’ Rights Institute at Georgetown University Law Center.

The NLRB has policed executives’ comments about unionizing. The board ruled that Tesla CEO Elon Musk and the publisher of conservative online magazine the Federalist violated the law for union-related threats they made on Twitter. A federal appeals court overturned the board’s ruling against the Federalist, while Tesla’s challenge is pending.

Schultz’s comments seem more like an expression of general dislike of the union rather than something that, in isolation, violates the law, said Jeffrey Hirsch, a University of North Carolina labor law professor.

Even if the agency doesn’t issue a complaint, the statements could be used as evidence later if contract negotiations falter and the union accuses Starbucks of merely going through the motions with no good-faith intent to reach an agreement, said Hirsch, a former NLRB attorney.

Unions have reasons to file charges in response to statements like Schultz when they’re not guaranteed winners, said Joseph Slater, a labor law professor at the University of Toledo.

“Among other things, such filings can serve to educate employers that certain types of statements are illegal, and they can serve to inform the public of what an employer is doing in an attempt to bring pressure on that employer by creating negative publicity,” he said.

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Genevieve Douglas at gdouglas@bloomberglaw.com