In clash with Bernie Sanders, Starbucks' Howard Schultz insists he's no union buster

It was a hearing for the history books: Billionaire Howard Schultz, the resolutely anti-union architect of Starbucks, faced Sen. Bernie Sanders, the outspoken champion of the union movement in Congress.

Schultz was once a prominent Democrat hailed as a progressive corporate pioneer of better pay and benefits for service industry workers. On Wednesday, under threat of subpoena, he appeared in the Senate to address allegations that Starbucks has been breaking labor laws as it fights its employees' nationwide unionization push.

"Over the past 18 months Starbucks has waged the most aggressive and illegal union-busting campaign in the modern history of our country," Sanders said. "The fundamental issue we are facing today is whether we have a system of justice that applies to all — or whether billionaires and large corporations can break the law with impunity."

Schultz, fresh off his third stint as Starbucks CEO, repeatedly denied any wrongdoing.

"Sir, Starbucks coffee company, unequivocally — and let me set the tone for this very early on — has not broken the law," he said. The statement was met by some laughter from the gallery.

He categorically denied being a union-buster and said he took offense at being characterized as one. That also elicited laughter from the audience.

"We want to treat everyone with respect and dignity," Schultz continued. "However, I have the right, and the company has the right, to have a preference. And our preference is to maintain the direct relationship we've had with our employees, who we call partners."

As the Senate hearing began, a long queue of managers and corporate employees crowded inside, wearing matching t-shirts — as did dozens of Starbucks Workers United members.

The Health, Education, Labor, and Pensions committee — chaired by Sanders, an independent from Vermont — streamed the proceeding online. After Schultz's testimony, lawmakers also heard from two Starbucks baristas, one current and one former.

Hundreds of unionized stores, and scores of complaints

Employees at nearly 300 coffee shops have now voted to join Starbucks Workers United, about 3% of the chain's company-owned locations in the U.S. Starbucks has shuttered some unionized stores and fired some workers involved in organizing, citing misconduct.

Federal labor officials have issued scores of complaints against the coffee giant. Administrative law judges have found Starbucks violated labor laws in at least eight of those cases so far, which the company is appealing. Some rulings have ordered Starbucks to reinstate fired workers and issue them back-pay. One said Starbucks engaged in "egregious and widespread misconduct demonstrating a general disregard for the employees."

During the hearing, Schultz pointedly noted that one of the workers Starbucks was ordered to reinstate had in fact violated company policy by reopening a store after hours "for activities that were not consistent with safety and procedures at Starbucks."

Even so, Democrats on the committee appeared unmoved.

"It is akin to someone who has been ticketed for speeding a hundred times saying 'I've never violated the law, because every single time — every single time — the cop got it wrong,' " Sen. Chris Murphy, D-Conn., told Schultz. "That would not be a believable contention."

Starbucks and the union have also failed to reach any collective-bargaining contract for any of the unionized stores, and negotiations are stalled. Both sides accuse each other of undermining the process.

On Wednesday, noting that the first group of Starbucks workers to win union elections have been waiting more than 460 days to negotiate a first contract, Sanders pressed Schultz to promise that Starbucks would exchange proposals with the union within 14 days of the hearing.

Schultz declined to make any such promise. He did say the company would continue to bargain in good faith in face-to-face sessions, but not in sessions streamed on Zoom as demanded by the union, citing safety and privacy concerns.

Three-time CEO pushed back on the 'moniker' of billionaire

Schultz touted Starbucks as a worker-focused and generous employer, with pay averaging $17.50 an hour — more than the minimum wage in every state — and benefits, including college tuition and company stock.

Such statements drew praise from Republicans on the committee, who lauded his entrepreneurship as an American success story.

And when it came to criticism from Democrats, Schultz appeared at times deeply offended.

When Sen. Tina Smith of Minnesota commented on the imbalance of power between hourly Starbucks workers and their billionaire CEO, Schultz pushed back against the term "billionaire," which he called a moniker.

"I grew up in federally subsidized housing. My parents never owned a home. I came from nothing," he said emphatically. "Yes I have billions of dollars. I earned it. No one gave it to me. And I've shared it constantly with people of Starbucks. And so anyone who keeps labeling this billionaire thing--"

Interrupted by Sanders telling him his time had run out, Schultz managed to add, "It's your moniker constantly. It's unfair."

Schultz last week stepped down from his third term as Starbucks CEO since the 1980s, staying on as a member of the board and a major shareholder. He had agreed to testify in the Senate only after the committee prepared to subpoena him. Sanders rejected Starbucks' offers of other representatives instead.

Schultz first led the coffee chain to huge expansion between 1986 and 2000, returning to the chief executive job from 2008 to 2017 and again last April. In 2019, Schultz grabbed headlines as he explored a presidential run against Donald Trump as an independent.

Last week at the Starbucks shareholder meeting, the new CEO Laxman Narasimhan did not signal any change in the company's stance on unions.

But at that same meeting, shareholders voted to approve a proposal for an independent assessment of how well Starbucks is adhering to its commitment to workers' rights. The company had encouraged shareholders to vote against it.

NPR's Mary Yang and Greta Pittenger contributed to this report.

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