New York (WABC) — Starbucks has settled a $38.9 million lawsuit brought by the New York City Department of Consumer and Worker Protection, the city announced Monday.
The lawsuit found that Starbucks repeatedly violated the law at more than 300 different locations by suddenly cutting employees’ hours and changing their schedules without notice.
The workers were also denied the opportunity to take additional shifts.
Starbucks will pay more than $35.5 million in compensation to more than 15,000 employees and also pay more than $3 million in penalties.
Starbucks barista Kai Fritz said, “This settlement is a step in the right direction. It shows how much power baristas have when we stand together and demand change.” “We are continuing to fight against Starbucks’ greed and will not stop until we get a fair contract that ensures we have the support and protections we need to move forward.”
Under the agreement, most employees working in hourly positions for Starbucks in New York City will receive $50 for each week worked from July 4, 2021 to July 7, 2024.
The agreement also guarantees that employees laid off during recent store closures in the city will have the opportunity to be reinstated at other company locations.
The Adams administration said it was the largest labor protection settlement in city history.
Mayor Eric Adams said, “It doesn’t matter how big your business is or how much money your company makes, if you violate the rights of our workers, you will pay a price.” “With this historic agreement, we will put 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. We will ensure that New York City remains a place where workers are treated fairly and working-class people can still get ahead.”
Starbucks said in a statement that New York City’s law is “extremely challenging to manage and this is not just a Starbucks issue, nearly every retailer in the city faces these hurdles.”
He said the violations are “about compliance” and “not about withholding wages or failing to pay partners.”
The city launched an investigation in 2022 after receiving dozens of employee complaints against multiple Starbucks locations and eventually expanded its probe to hundreds of stores in the city. The investigation found that most Starbucks employees never received regular schedules and that the company routinely reduced employees’ hours by more than 15%, making it difficult for employees to know their regular weekly income and plan around other commitments, such as child care, education or other jobs.
According to the city, the company also routinely denies workers the chance to pick up extra shifts, leaving them involuntarily placed in part-time status.
The agreement with New York comes as the Starbucks union continues a nationwide strike at dozens of locations that began last month. There is a dispute between the two sides over the number of shops affected and the impact of the strike.
(The Associated Press contributed to this report.)
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