Former Starbucks CEO Howard Schultz defended his company’s labor policies in a Senate HELP Committee hearing which Committee Chair Bernie Sanders (I-VT) held to focus on what he termed the company’s waging of “the most aggressive and illegal union busting campaign in the modern history of our country.” Testifying alone for almost two hours, Mr. Schultz touted the company’s pay and benefits, noted that the company’s “direct relationship we have with our partners…is fundamental to who we are and to the success of our business,” and stated that the company is committed to good faith bargaining where a store has a union.
Differences over the value of unions: While Democrats focused extensively on Starbucks’ alleged violations of the National Labor Relations Act, there was little dispute of Schultz’s portrayal of the company as a good employer in all other respects. Instead, Sen. Tammy Baldwin (D-WI) asserted that, particularly with a large company, employees can only have a voice through a union and, without one, they are subject to a “power dynamic” that favors the company. Sen. Tina Smith (D-MN) challenged Schultz: “It seems as if you feel that only bad companies should be unionized.” In contrast, Republican senators generally embraced the role of unions in countering employer abuses.
When is an employer “guilty”? Neither Mr. Schultz nor committee Republicans disputed the existence of numerous determinations of labor law violations made by NLRB regional offices and administrative law judges. However, as Mr. Schultz noted, “No Starbucks cases involving Workers United have been decided by the Board, and the NLRB litigation process usually takes years to complete.” Unless settled, the various ALJ decisions and other pending cases will eventually go before the full National Labor Relations Board and then the federal courts, if challenged. NLRB decisions are very frequently overturned by the courts, and Starbucks would not be the first party—employer or union—to wait for a court decision before complying with a Board order.
Bad faith bargaining allegations: Much of the hearing focused on the absence of collective bargaining agreements at any of the stores that voted to unionize, more than a year later in most instances. While such delays are not unusual in first contract situations, Mr. Schultz’s testimony highlighted the difficulty in determining bad faith bargaining allegations. He asserted that the company had made numerous efforts to begin bargaining sessions but, in each one, the union insisted that it be done by Zoom, which the company refused. At this time, there is no existing law on whether a party can insist on Zoom bargaining, which would lend itself to public broadcasting and recording, impeding the frank discussions needed for effective bargaining.
Allegations of NLRB misconduct: In his opening statement, Ranking Republican Bill Cassidy (R-LA) stated that “the NLRB is currently facing its own credibility crisis.” He noted a report from an NLRB hearing officer of voting irregularities in one election, including “supplying union organizers with confidential voter information, and providing voter accommodations to employees selected by the union without offering them to all employees.” Former Alabama Republican Congressman Bradley Byrne, who represents an NLRB whistleblower, addressed this in his testimony, stating that “neutrality is central to the obligation to maintain laboratory conditions, and to the assurance of integrity in the election process.” Byrne urged the committee to investigate whether “behavior in this one election is a unique instance of a rogue ‘one off,’ or is there a pattern and practice of doing so in other representation elections?” Sen. Cassidy noted: “It begs the question, are NLRB employees weaponizing the agency against American employers to benefit politically connected labor unions?”
Not the end of the story: As long as there are no collective bargaining agreements at the unionized Starbucks stores, the unions and Sen. Sanders will keep this story in the forefront. The question is whether this focus is self-contained in the Starbucks context or whether it will have ripple effects for other companies. It is likely that Starbucks will be used as the poster child for enabling unions to require first contract arbitration, as provided in the PRO Act. In addition, the hearing highlighted the tax deductibility of union response activities, which could also generate legislation. Finally, the story highlights the power of Congress, even without the ability to enact new laws, to apply pressure on targeted companies. Meanwhile, the very activist NLRB General Counsel, Jennifer Abruzzo, will do everything in her power to bring the law as close to the PRO Act as possible.
