Starbucks Settles $38.9 Million Lawsuit in New York City

NEW YORK (WABC) — Starbucks has agreed to a $38.9 million settlement to resolve a lawsuit filed by the New York City Department of Consumer and Worker Protection, the city announced on Monday. The lawsuit, initiated amid multiple complaints, found that Starbucks frequently altered employee schedules without notice and reduced work hours at more than 300 locations in the city.

The settlement includes over $35.5 million in restitution for more than 15,000 workers, with individual payments of $50 for each week worked between July 4, 2021, and July 7, 2024. Additionally, Starbucks will pay more than $3 million in fines.

“This settlement is a step in the right direction,” said Starbucks barista Kai Fritz. “It shows the power baristas have when we stand together and demand change.” Fritz emphasized the ongoing fight for fair contracts and better working conditions. The agreement also ensures that employees laid off during recent store closures in the city will have the opportunity for reinstatement at other company locations.

Mayor Eric Adams called it the largest worker protection settlement in the city’s history, emphasizing the importance of holding businesses accountable. “It does not matter how big your business is or how much money your company makes, if you violate our workers’ rights, you will pay the price,” he said. Adams noted that the settlement will help put tens of millions of dollars back into the pockets of hardworking New Yorkers.

In response, Starbucks acknowledged the complexities involved with the city’s labor laws, describing them as “notoriously challenging.” The company insisted the violations mainly concern compliance and not intentional wage withholding. The investigation began in 2022 after receiving multiple worker complaints and revealed that many Starbucks employees often lacked regular schedules while facing reductions in hours exceeding 15%, complicating their ability to manage personal commitments like childcare and education.

The settlement comes amid ongoing nationwide strikes by Starbucks’ union, which began last month at various locations. Both the company and union have disputed details regarding the number of affected stores and the overall impact of the strikes. The case highlights the significant issues surrounding workers’ rights and employer responsibilities in New York City.