Starbucks shareholder sues for diverse hiring

Amid labor unrest, Starbucks is now facing a lawsuit alleging racial bias against white job applicants. On behalf of the National Center for Public Policy Research (NCPPR), a shareholder, the American Civil Rights Project filed the lawsuit, National Center for Public Policy Research c. Howard Schultz and. AlNo. 22-2-02945-32, August 30 in Spokane County Superior Court in Washington State.

“Starbucks has set targets for the number of ‘diverse’ – i.e. non-white – employees it hires, and those targets are tied to executive compensation. This is pure racial discrimination. and simple,” said Scott Shepard, director of the NCPPR’s Free Enterprise Project, in a press release from August 31. According to the lawsuit, the plaintiff warned Starbucks management of the “unlawfulness of their policies” and how it “invited an almost endless collection of meritorious lawsuits, capable of being brought by an almost innumerable collection of private and public plaintiffs.”

The coffee chain started link executive compensation to DEI objectives in fiscal 2021. Named in the lawsuit are interim CEO Howard Schultz, chief operating officer John Culver, chief financial officer Rachel Ruggeri, chief ethics and compliance officer Tyson Avery, and CIDO Dennis Brockman, among others. NCPPR mentioned Starbucks Commitment to Inclusion, Diversity and Equity and its goal to “achieve at least 30% BIPOC representation at all levels of the company and at least 40% in all retail and manufacturing positions by 2025.”

Officers and directors who act on these “discriminatory policies violate their fiduciary duties to their shareholders and should be held accountable for those actions,” Shepard continued. The NCPPR also denounced the entry of the coffee company into the Board Diversity Action Alliance — a collective made up of industry peers such as Albertsons, PepsiCo, MasterCard, UnderArmour and UPS. “It cannot be in the interests of shareholders for Starbucks officers and directors to push the company to violate a wide range of civil rights laws by discriminating on the basis of race,” Shepard added. “These officials should be ashamed of themselves and held accountable.”

The trial itself took similar positions, arguing that “Starbucks, acting through its officers and directors, developed and publicized these policies with fanfare, vaunting the purported moral virtue their adoption signaled.” The complaint targeted the individuals, personally, saying they “should (and knew) better”.

It’s not uncommon for companies to implement various hiring practices – especially in the wake of the summer 2020 anti-racism revival, following the police killing of George Floyd and the murder by Breonna Taylor. Two years later, all Fortune 100 companies have DEI commitments, including hiring initiatives, available for public consultation; this list includes old school American business leaders Isuch as Walmart, Home Depot, General Motors, Coca-Cola, Chevron and Exxon Mobil.

Many companies have gone the extra step to tie executive compensation to C-suite tracking of equity and inclusion goals. Prior to Starbucks’ announcement, Wells Fargo made a similar announcement in June 2020; Uber announced its DEI compensation policy in July 2019. Research firm Semler Brossy published research in January 2022 noting that 28% of S&P 500 companies included DEI as a measure in their executive incentive plans the previous year. (The S&P 500 Index straddles the Fortune 500, including leaders in food manufacturing, gas, healthcare and supply chain.)

Similarly, Mercer tracked environmental and social governance measures among S&P 500 executive incentive plans; in April 2022, researchers noted a increased disclosure of ESG incentives, from 35% to 46% of plans. Based on the positive responses to the forward-looking statements, the researchers said: “It is likely that at least 70% of S&P 500 companies will disclose a compensation program that incorporates ESG measures of achievement in some form or another. next year.”

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