Starbucks (SBUX) has reached an agreement with New York City’s Department of Consumer and Worker Protection (DCWP) commissioner Vilda Vera Mayuga and Mayor Eric Adams concerning violations over the city’s Fair Workweek Law.
A multi-year investigation by DCWP found Starbucks (SBUX) violated NYC’s workweek law more than half a million times since 2021 by denying thousands of employees across city restaurants the right to stable and predictable schedules, the right to pick up additional hours — thus keeping them involuntarily as a part-time worker — and for “routinely and unlawfully” reducing employees’ hours by more than 15%. As a result, DCWP accused the company of “arbitrarily cutting schedules and illegally prioritizing their own profits over workers’ rights.”
Under NYC law, fast food employers must give employees regular schedules, work schedules 14 days in advance that are consistent with regular schedules, premium pay for schedule changes, the opportunity to decline additional shifts, and opportunity to work newly available shifts before hiring new workers. Additionally, employers cannot schedule an employee to a closing shift and an opening shift the very next morning without employee approval and $100 premium to work the opening shift.
The settlement with DCWP requires Starbucks (SBUX) to pay $38.9M, which includes $35.5M in restitution to over 15,000 employees that were affected between July 2021 and July 2024, and $3.4M in civil penalties and costs. The settlement also requires the company to comply with the law going forward. The settlement provides $50 for each employee every week worked from July 4, 2021, to July 7, 2024.
The settlement also carves out claims related to employees who were laid off from recent Starbucks (SBUX) NYC closures, providing former employees with the right to reinstatement at other locations.
The coffee chain is currently in the third week of a “Red Cup Rebellion” with members of the Starbucks Workers United union. With only 120 stores impacted by the strike, Starbucks (SBUX) maintains that the work stoppage has caused “minimal disruption” to its operations.
While 125,000 people signed the “No Contract, No Coffee” pledge, Starbucks (SBUX) reported record sales for its Red Cup Day.
Shares are down 1.5% on Monday.