Starbucks Corp. agreed to pay workers $38.9 million after losing a lawsuit against New York City’s Department of Consumer and Worker Protection on Dec. 1.
The company was sued for illegally cutting employee hours by more than 15%, refusing to provide extra shifts and changing schedules without proper notice, actions that violated NYC’s Fair Workweek Law.
Following the settlement, $35.5 million will go to 15,000 affected employees and the remaining $3.4 million will go toward civil penalties.
Hourly employees will receive $50 for every week they worked from July 4, 2021 to July 7, 2024. Starbucks has also agreed to comply with the Fair Workweek Law going forward.
The DCWP will continue investigating Starbucks for any more violations that occurred after July 2024.
“All workers deserve to be treated with dignity, and we are proud to stand up for our neighbors when a multibillion-dollar company like Starbucks chooses to systematically violate their employees’ rights,” DCWP Commissioner Vilda Vera Mayuga said in a press release.
The DCWP’s investigation started in 2022 following complaints from several Starbucks baristas about unfair working conditions.
In addition to receiving last-minute calls to come into work and complex online orders, employees who requested more shifts were denied, forcing many to remain part time.
Further along in the investigation, it was discovered that more than 300 Starbucks locations were violating laws. In 2021, Starbucks workers in Buffalo voted to establish a labor union, making it the corporation’s first.
However, Starbucks failed to improve working conditions since then, prompting employees nationwide to go on strike.
NYC Mayor-elect Zohran Mamdani and Sen. Bernie Sanders joined one of the union’s strikes in Brooklyn on Dec. 1 to showcase their support.
“These are not demands of greed – these are demands of decency,” Mamdani told a crowd of baristas striking on the picket line, according to Fortune. NYC Mayor Eric Adams also weighed in on the lawsuit, condemning Starbucks for mistreating its employees.
“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 press release.
“We’ll make sure that New York City remains a place where employees are treated fairly and working-class people can still get ahead.”
Starbucks has recently struggled to generate profits due to inflation. More customers are saving money by frequenting other cafes, deeming Starbucks beverages too expensive.
“[New York City law] is notoriously challenging to manage,” Starbucks Spokesperson Jaci Anderson told the Associated Press.
“I sure hope that it gives Starbucks an awakening,” Kaari Harsila, a manager at a Starbucks store located in Brooklyn, told The Washington Post.
