Starbucks agrees to $39M settlement with New York City over labor violations

Starbucks will pay workers $35.5 million under the settlement with New York City. | Photo: Shutterstock.

Starbucks has agreed to pay nearly $39 million to settle allegations that it violated New York City rules over scheduling and hours reductions, both the city and the company announced on Monday.

Most of that, $35.5 million, will go to more than 15,000 Starbucks employees. The coffee-shop giant will also pay $3.4 million in civil penalties and costs. 

The settlement also came amid an ongoing strike at a few of the chain’s unionized locations. Both New York City Mayor-Elect Zohran Mamdani and U.S. Sen. Bernie Sanders joined baristas on a picket line on Monday. 

New York City’s Department of Consumer and Worker Protection (DCWP) accused Starbucks of more than a half million violations of the city’s Fair Workweek Law dating back to 2021 at more than 300 of the chain’s locations. 

The department launched its investigation in 2022 following complaints from Starbucks workers that they didn’t receive regular schedules and that the company routinely reduced employee hours and denied employees the ability to pick up additional shifts.

“With this landmark settlement, we’ll put tens of 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,” outgoing New York City Mayor Eric Adams said in a statement. 

The Fair Workweek Law requires fast-food restaurants in the city to provide workers with regular schedules at least 14 days in advance, while requiring premiums be paid over schedule changes or “clopenings,” when workers must close one day and open the next.

It also requires restaurants to give workers opportunities to work more regular hours and forbids them from firing workers or reducing their hours by more than 15% without cause.

Starbucks in a statement on its website said that it agreed to settle the allegations with the city in a bid to “move forward,” but it was also critical of the law and its complexity, noting that even simple schedule changes can trigger violations.

“We support the intent of the law and remain committed to compliance, but its complexity creates real-world challenges,” the company said. 

Starbucks said that even minor schedule changes can trigger violations. For instance, if workers—which Starbucks calls “partners”—call out for three of their 20 normally scheduled hours and the company asks someone to cover, that could be a violation.

“The law treats almost any adjustment as a potential issue, even starting a shift two hours later than planned, even if the total hours and pay stay the same,” the company said. 

The company also said that other food and beverage retailers face similar hurdles, and employers have paid tens of millions of dollars in settlements with the city. 

Starbucks said that payments to workers under the settlement are “about compliance, not unpaid wages,” and that it will share details of those payments with the recipients in the coming weeks. 

“The Fair Workweek law is notoriously complex and difficult for restaurant operators to comply with, even when trying in good faith,” Kevin Dugan, director of government affairs for the New York State Restaurant Association, said in a statement. “While well-intentioned, the law creates a nearly insurmountable burden to maintain consistent work schedules in the face of changing business demands, unforeseen employee absences and many other staffing issues common in the restaurant business.” 

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Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants.

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