Starbucks to pay $38.9 million settlement after it violated New York's labor laws
New York City is a hub of capitalism where businesses thrive, but it's also strict about the rights of the workers on whose labor major brands and companies are built. In line with these values, American multinational coffee chain Starbucks will be paying $38.9 million in a landmark settlement announced by New York's outgoing mayor, Eric Adams. The company was accused of violating NYC's Fair Workweek Law over half a million times since 2021, by failing to provide proper advance notice of shift scheduling to thousands of employees who work on an hourly basis. Following the settlement, Starbucks will pay about 15,000 workers a weekly compensation and millions in civil penalties.
According to the settlement made public on Monday, Starbucks will pay $35.5 million to the 15,000 current and former employees who worked at the company's stores between July 2021 and July 2024. The settlement will give each of these workers $50 each week to resolve the alleged violations of the city's Fair Workweek ordinance. “With this landmark settlement, we’ll put tens of millions of dollars back into the pockets of hard-working New Yorkers and reinforce every New Yorker’s right to a reliable schedule, full hours, and basic dignity,” Adams said in a statement. Additionally, Starbucks will shell out $3.4 million in civil penalties and fees, and the settlement guarantees employees laid off during recent store closings will get a chance to get reinstated at other company locations, according to the announcement.
On the other hand, Starbucks said it is committed to operating responsibly and in compliance with all applicable laws and regulations. "This compensation is about compliance, not unpaid wages," the company wrote in a release. "We support the intent of the law and remain committed to compliance, but its complexity creates real-world challenges," the statement added.
While the settlement covers the past violations in New York City, it does not acknowledge the demands of the union of workers who are currently striking across 100 stores. The employees of the coffee giant are on the streets, demanding higher wages, better staffing, and improved working hours for all. New York's Mayor-elect, Zohran Mamdani, and Senator Bernie Sanders, joined the striking Starbucks employees on Monday in Brooklyn, hours after Adams announced the $39 million settlement.
“Because all of us are united in the belief that we must build in New York where every worker can live a life of decency,” Mamdani said, speaking from the picket line outside a Gowanus Starbucks, the New York Post reported. Tying the strike to his campaign on affordability, he added, “As we say that this is a union town, and we must build a New York where the workers who power it are able to afford to live in it.”
The two leaders also talked about the inequality in pay and the division of wealth between the top brass and the daily wage workers of the company. They claimed Starbucks CEO Brian Niccol got $96 million in pay after just four months on the job, while many of his workers are forced to live paycheck-to-paycheck. “We are living in an economy where the people on top have never, ever had it so good,” Sanders said, as per the publication.
More on Market Realist:
Investor who predicted 2008 financial crisis comes up with another prediction — this time against AI
People are rushing to Costco after seeing the price of their Thanksgiving dinner kit
Hackers send hundreds of thousands of scam texts to New Yorkers — should you be worried?
