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Former Starbucks CEO Howard Schultz faces Senate over labor practices

Yahoo Finance’s Brooke DiPalma joins the Live show to discuss the expectations for former Starbucks CEO Howard Schultz’s Senate testimony amid accusations of conducting illegal union-busting campaigns.

Video transcript

JULIE HYMAN: Let's turn our attention to Capitol Hill. Former Starbucks CEO Howard Schultz is facing the Senate Health, Education, Labor, and Pensions Committee today over criticisms of the company's labor practices. Yahoo Finance's Brooke DiPalma has been listening in on that hearing. I think we're still on, what, opening statements there, right?

BROOKE DIPALMA: Just on opening statements here.


JULIE HYMAN: And we saw a picture of Bernie Sanders before, and I think-- he's the chair of that committee. I think we're expecting his comments to be barbed, perhaps.

BROOKE DIPALMA: That's right. Well, kicking off the Senate hearing right here, he's already giving Howard Schultz and Starbucks about 14 days to reach conclusion here when it comes to this unionization efforts. Those that have voted yes to these stores, of course, this is in waged that-- this is in accusations that they waged an aggressive and illegal union busting campaign under Howard Schultz's leadership. Now, the former Starbucks exec will-- well, is expected to emphasize in his prepared remarks that Starbucks should have a direct relationship with its partners. They still believe that that is fundamental Starbucks culture and success.

Schultz says-- is expected to say, rather, that they have engaged in good faith bargaining, and more importantly, that the union's wrongdoing is the reason why no conclusions have been reached here, saying, quote, "However, Union representatives have improperly demanded multi-store negotiations, delayed or refused to attend meetings, and insisted on unlawful pre-conditions, such as virtual bargaining and participation by outside observers."

Now, of those stores that have voted yes, the labor organization Starbucks Workers United is behind that effort. And when I asked them what exactly they hope to get out of today, they said, quote, "We hope that this hearing exposes Starbucks' illegal union busting campaign, exposes the truth about how Starbucks really treats their workers. They went on to agree with Senate chair that Howard Schultz is the, quote unquote, "architect" of Starbucks' anti-union campaign that has driven Starbucks labor policy.

Now, it's important to note here that of the stores that have unionized, have voted yes to unionize, right, there is 293, a small portion of Starbucks total 9,000 US company-owned stores. But Starbucks Workers United did announce that during the annual meeting last week, seven more stores filed to unionize. Of course, they still have yet to vote on whether or not that will proceed.

But in today's hearing, we're expected to hear from a variety of different folks, including Maggie Carter, one of the first baristas at a location in Knoxville, Tennessee to unionize. We're also set to hear from a worker that the NLRB says was fired after looking and trying to unionize his location, along with labor experts and legal experts across the board. But of course, this comes as Howard Schultz is set any moment now to make his remarks when it comes to these accusations.

BRAD SMITH: So what sort of implications or even precedent could this hearing set?

BROOKE DIPALMA: Yeah, well, Starbucks is known to give out a higher minimum wage. They're known to set their college tuition program. They're known to give mental health benefits, as well as other perks and benefits, they call it. And so ultimately, this could lead to a wave across the industry. What's precedent is set at this meeting.

When I spoke to one analyst yesterday, Sean Dunlop of Morningstar, he said, quote, "Starbucks has long been perceived as a leader in the restaurant space with respect to the employee value proposition." So to see the unionization push strike at the coffee chain reverberates across the rest of the industry. Of course, we're already seeing this to police who are in Michigan voting yes to unionize. And so certainly setting a precedent here, and we'll continue to tune in all day.

BRAD SMITH: All right, Yahoo Finance's own Brooke DiPalma tracking this. And you've got your headphones with you on set, but we'll let you put those headphones back in and tune into what's going on. Thanks so much, Brooke.