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Oct. 9, 2022, 11:34 p.m. EDT

Exclusive: Starbucks urged to work with unions in letter from members of Congress

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By Levi Sumagaysay

Almost three dozen lawmakers on Monday urged Starbucks Corp. to work with the unions that have formed at nearly 250 of its stores around the nation, and expressed concerns about allegations that the coffee chain is discriminating against workers who are unionizing by withholding wage and benefits increases.

U.S. Rep. Ro Khanna, a California Democrat, led a group of his congressional colleagues in sending a letter to Starbucks /zigman2/quotes/207508890/composite SBUX +1.55% Chief Executive Howard Schultz, he revealed in an exclusive interview with MarketWatch ahead of the letter’s release. He said Starbucks has a chance to lead the way in helping change the lives of workers around the nation.

“If they end up being supportive of unionization, they could set a model for the food and drink industry in America,” the congressman said. “Then they could rightly say they’re being progressive.”

Thirty other members of Congress signed the letter, including Khanna’s fellow Democratic representatives from California, such as Karen Bass, Mark DeSaulnier and Barbara Lee, as well as representatives from around the country including David Cicilline, Pramila Jayapal, Jerrold Nadler and Rashida Tlaib.

“As workers renegotiate the compact between employee and employer across workplaces nationwide, we encourage both parties to work together, mend differences and unite to help build an economy that works for everyone,” the letter reads.

For more: Read the entire letter

In his interview with MarketWatch, Khanna pointed out that the coffee chain was known in the 1990s for being progressive and for treating its employees well, but it is now facing numerous accusations of union busting from the National Labor Relations Board.

“They need a Starbucks 2.0,” Khanna said. “They need an update. They have to get with the times if they want to remain progressive.”

Similar accusations were cited by Starbucks investors who recently filed a shareholder proposal urging an independent review of the company’s stated commitment to freedom of association and collective-bargaining rights, as well as an earlier letter to the company from a wider group of shareholders who said they were concerned about human and labor rights, and reputational risk.

Khanna added that he has corresponded with incoming Starbucks CEO Laxman Narasimhan and has asked to discuss the company’s labor issues with him when Narasimhan officially takes the helm next year.

MarketWatch contacted Starbucks for comment Monday morning. Schultz and other company executives and representatives have repeatedly said the company prefers to discuss working conditions directly with employees over negotiating through a union.

Starbucks Workers United, which was cc’d in the letter Khanna sent to Schultz, said it stands “united in calling for CEO Howard Schultz and Chair of the Board Mellody Hobson to stop breaking federal labor law and treat us with the dignity and respect we earn every day.”

Khanna supported California’s FAST Recovery Act, the recently signed law that would establish a fast-food council aimed at improving wages and working conditions for fast-food workers. He thinks “the organizing at Starbucks is one of the most consequential and hopeful signs for workers in America,” he said.

Khanna’s district includes sections of Silicon Valley, and he has worked as a lawyer representing technology companies on intellectual-property issues and was elected to Congress with the support of the tech industry. He acknowledged that the tech industry also has labor-related issues. Retail workers at Apple Inc. /zigman2/quotes/202934861/composite AAPL -0.57% and warehouse workers at Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -1.61% are in the midst of unionization pushes, too.

In-depth: Unions’ push at Amazon, Apple and Starbucks could be ‘most significant moment in the American labor movement’ in decades

“I’ve supported the labor movement in Silicon Valley for a long time,” the congressman said. “I marched with Justice for Janitors” when janitors who worked at Silicon Valley’s tech companies were organizing, he added.

In a region that has “created more wealth than anywhere in history,” Khanna said “it would be wrong” for workers to feel like “you can’t pay for rent and your kids’ education, and think, ‘I’m going to be part of the middle class.’ “

One household name and tech-sector company, Microsoft Corp. /zigman2/quotes/207732364/composite MSFT -1.00% , deserves credit for announcing over the summer that it intends to honor its workers’ rights to organize and for promising to engage with those who unionize, Khanna said.

Microsoft CEO “Satya Nadella has shown tremendous leadership in coming to an agreement with the [Communications Workers of America] and really valuing the dignity of workers,” the congressman said. He said Starbucks might want to look to Seattle-area neighbor Microsoft as a model.

Read on: Starbucks to spend $450 million next year to revamp stores, speed up service

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