Starbucks Corporation announced a settlement with New York City that will see the coffee‑chain pay $38.9 million to resolve alleged violations of the city’s Fair Workweek law. The payment consists of $35.5 million in restitution to more than 15,000 workers who reported erratic schedules and unexplained hour cuts, and $3.4 million in civil penalties to the city.
The violations that prompted the settlement occurred between July 4 2021 and July 7 2024, a period that saw over 500,000 infractions. The settlement requires Starbucks to provide back pay for lost hours and to adopt the city’s scheduling requirements moving forward, ensuring that partners receive advance notice and premium pay for schedule changes.
Starbucks’ Q4 2025 earnings report, released the same week, showed consolidated net revenues of $9.6 billion—up 5% from the prior year—while GAAP earnings per share fell 85% to $0.12. The sharp decline in profitability was largely driven by $500 million in restructuring and investment costs associated with the company’s “Back to Starbucks” strategy, which focuses on improving the partner experience and modernizing store operations. The settlement adds a significant one‑time expense to an already pressured earnings profile.
The company will now be required to comply with New York City’s Fair Workweek law, which mandates predictable scheduling, advance notice, and premium pay for schedule changes. Implementing these requirements will necessitate changes to Starbucks’ scheduling software and partner communication processes, potentially increasing labor costs and operational complexity in the city’s largest market. The settlement also signals to the broader labor movement that Starbucks is under scrutiny for its scheduling practices, a factor that could influence unionization efforts nationwide.
After the announcement, Starbucks’ shares fell 1.5% in afternoon trading, reflecting investor concern over the $38.9 million outlay and the additional compliance obligations. Analysts noted that the settlement, combined with ongoing labor disputes and unionization activity, could weigh on short‑term cash flow and erode margins in a key market.
CEO Brian Niccol said the company “recognizes the complexity of the Fair Workweek law and is committed to meeting its requirements.” He added that the settlement is part of a broader effort to strengthen partner relations and that the company’s investment in scheduling tools is intended to reduce future violations and improve partner satisfaction.
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