On December 1st, city officials announced that the American chain coffee shop Starbucks will pay approximately 35 million dollars in compensation to over 15,000 employees in New York City. This marks the highest amount ever awarded in a settlement agreement for employee protection in the city. Starbucks was accused of exploiting thousands of employees by cutting their working hours arbitrarily.
According to the mayor’s office, this historic settlement stems from a years-long investigation by the Adams administration. Over 300 Starbucks stores across the city were found to have cut employees’ hours at will, forcing them into part-time work and failing to provide predictable scheduling, resulting in more than 500,000 violations of the Fair Workweek Law.
The agreement stipulates that hourly Starbucks workers in New York City will receive $50 per week in compensation from July 2021 to July 2024; employees who have worked for a year and a half during this period will receive $3,900. Additionally, the settlement agreement requires Starbucks to pay $3.4 million in civil penalties and litigation costs, and mandates the company to comply with the law in the future.
Mayor Adams stated that this is a “milestone” settlement agreement and emphasized that regardless of the size of a business or its profits, if workers’ rights are violated, there will be consequences.
“The Fair Workweek Law in New York City provides crucial protections for workers such as having predictable work hours so that they can plan their lives and secure stable incomes, but Starbucks chose to ignore these rights, prioritizing their own profits,” said Vilda Vera Majuga, director of the New York City Department of Consumer and Worker Protection (DCWP), in a statement. “All workers deserve respect, and when a company like Starbucks, worth billions of dollars, systematically violates workers’ rights, we are proud to stand up and defend the rights of our neighbors.”
In 2022, following numerous employee complaints, the DCWP launched an investigation into Starbucks. They found that the majority of Starbucks employees never had fixed working hours, making it difficult for them to plan their lives, such as taking care of children, pursuing education, or having second jobs. The department also pointed out that the company frequently denied employees overtime, forcing them to become part-time workers.
Under the Fair Workweek Law, fast-food employers in New York City are required to provide employees with fixed work schedules and give them a 14-day advance notice.
Starbucks released a statement on its website on Monday stating that the settlement money is “to ensure compliance, not to recoup unpaid wages.” The company expressed its commitment to complying with the Fair Workweek Law but added that meeting these requirements is not easy. Starbucks mentioned that nearly any adjustment to the schedule could be seen as a potential issue, including temporary changes due to employees calling in sick.
Representing 17 stores across the five boroughs of New York City, along with several others in New York City and Long Island, the Starbucks Workers United union escalated its ongoing “Red Cup Rebellion” strike on Black Friday, demanding improvements in hours and wages, as well as compensation for what they claim are anti-union behaviors by the company.
According to the union, 2,500 baristas from over 120 stores nationwide participated in this indefinite strike. However, Starbucks stated that the impact of the strike on store operations was minimal.