Judge: Starbucks violated federal labor law by withholding pay hikes from unionized workers

New York CNN

Starbucks broke federal labor laws when it offered new benefits and perks only to non-unionized employees. A National Labor Relations Board Judge found this Thursday.

This is the latest of a number of NLRB decisions that found Starbucks had violated labor laws in its attempts to prevent unions from forming within its coffee shops.

The issue in this case is whether [Starbucks] had the right to reward its employees for not taking part in union activities, "while falsely telling their workers that federal labor laws forced it to do this," wrote administrative law Judge Mara-Louise Anzalone. It was not.

The judge said that the company's actions were a "flagrant corporate-wide assault on the right of its employees to choose union representation".

Fast-forward to nearly two years ago. The first Starbucks store voted to unionize. This sparked a nationwide campaign for organizing. Starbucks has fought the unionization effort for nearly two years, and in some cases, acted illegally. Starbucks faces hundreds of unfair labor practices charges.

Who receives a salary increase?

Starbucks announced last year that it would increase wages for non union employees and provide them with other benefits. Howard Schultz said, when announcing the wage increase, that the company could not make the same improvements in locations where there is a union, or union organizing was underway. This was because federal law prohibited the company from making these improvements.

Anzalone stated that she did not agree with this reasoning in her decision on Thursday, and was backed up by the witness for Starbucks.

Anzalone wrote in her letter that to believe that Starbucks acted in good conscience with this claim, one would have to conclude that the company misunderstood basic labor law concepts. She concluded that the company was wrong to think that it could deny wages and benefit to unionized workers "without even considering bargaining or deferring the award of new pay for unionizing partners."

A judge said that such a leap of inference was not justified, given the other compelling evidence of [Starbucks] antiunion motivation. Earlier this summer, an NLRB Judge said that Starbucks displayed 'egregious misconduct' when it came to dealings with workers involved in unionization efforts in Buffalo, New York. Starbucks stated in a press release at the time it was 'considering every option to obtain a further legal review' and that they 'believe the decision and remedies ordered in this case are inappropriate. Starbucks has appealed and the case remains open.

Anzalone, in his decision of Thursday, recommended that Starbucks offer benefits and higher wages to excluded employees starting at the date they became effective for non-unionized workers.

She said that Starbucks should post a notice at its cafes informing workers of the NLRB's finding that Starbucks violated federal labor laws, as well as detailing their rights.

Starbucks plans to appeal this decision.

Starbucks spokesperson Rachel Wall told CNN that the company will continue to argue that Starbucks has adhered to established collective bargaining and organizing rules. She also plans to file an exception to the ALJ’s recommendation. The ALJ's suggestion that Starbucks could or should have ignored these rules creates a situation which is untenable, she said.

"A massive victory"

Starbucks' approach towards the union has been criticized.

Senators, led by Bernie Sanders, questioned Schultz in March about Starbucks' labor practices. Starbucks announced this month Schultz would be stepping down as a director, but retaining the title 'lifelong chairman emeritus'.

Investors also said that they wanted answers. Investors voted earlier this year to approve a proposition that the board of directors "commission and supervise an independent, third party assessment of Starbucks' compliance with its stated commitment to freedom of association and collective negotiation of workers." Shareholder proposals do not have any legal force.

Nearly 360 Starbucks locations have voted unionize, and their results have been certified by NLRB. This is a small number compared with the approximately 9.300 Starbucks company-operated stores in the US. Around 70 locations voted against unionization, and their results were certified.

The union organizers saw the recent Starbucks ruling as a victory.

Starbucks Workers United (the union that has led the charge) said in a CNN statement that Thursday's ruling was "a massive victory" for Starbucks employees.

The decision shows that Starbucks anti-union campaign began at the top and was coordinated.