In late 2024, the United States Court of Appeals for the Third Circuit issued an opinion in NLRB v. Starbucks Corp., 125 F.4th 78, enforcing in part—and in one respect vacating—an order of the National Labor Relations Board (NLRB). The case addressed allegations that Starbucks unlawfully terminated two employees engaged in protected labor organizing activities, violated the National Labor Relations Act (NLRA) by reducing employee hours due to those activities, and failed in its attempt to rely on an “after-acquired evidence” defense. This decision highlights critical issues for businesses, particularly those navigating labor disputes, union organizing efforts, and compliance with the NLRA’s protections of “concerted activities” for mutual aid or protection. This will explore how individuals—especially those involved in managerial decision-making—might modify and improve their business practices to comply with federal labor standards
and avoid costly litigation and reputational harm.
Please note this blog post should be used for learning and illustrative purposes. It is not a substitute for an attorney with expertise in this area. If you have questions about a specific legal issue, we always recommend that you consult an attorney to discuss the particulars of your case.
Factual Background and Procedural History
The underlying facts revolve around two Starbucks baristas, each of whom participated in discussions and demonstrations related to working conditions and store management—activities protected by the NLRA. Both were eventually terminated, ostensibly for infractions ranging from alleged rudeness to customers to the spread of unverified rumors about impending firings. One barista also had her hours reduced before termination; a change she viewed as retaliatory.
The National Labor Relations Board brought a consolidated complaint, alleging that Starbucks committed unfair labor practices by:
- Issuing disciplinary warnings in response to union activity.
- Reducing one barista’s hours, citing performance issues that the NLRB concluded were pretextual.
- Terminating both baristas because of their protected organizing activity, rather than for any legitimate, documented performance failures.
An administrative law judge (ALJ) agreed that Starbucks had retaliated in violation of Sections 8(a)(1) and 8(a)(3) of the NLRA. After reviewing the record, the NLRB largely adopted the ALJ’s findings and conclusions. Starbucks challenged the Board’s order and also raised constitutional objections to the removal protections affordedto ALJs. Ultimately, the Third Circuit enforced the majority of the NLRB’s order (including reinstatement and backpay remedies) but remanded on the issue of compensating employees for certain forms of “direct or foreseeable pecuniary harm.”
Key Legal Findings
- Protected Concerted Activities
The NLRA safeguards employees’ rights to discuss workplace conditions, unionize, and engage in lawful collective action. In NLRB v. Starbucks Corp., the employees participated in group discussions and demonstrations concerning workplace issues, such as reduced hours and alleged poor management practices. The Third Circuit held that there was substantial evidence that Starbucks’s decision-makers were motivated by animus toward these protected activities, confirming that any adverse employment actions taken in response to employees’ legally protected organizing constitute unfair labor practices. - Unlawful Termination and Pretext
Starbucks argued that its decisions to fire the baristas were based on legitimate policy violations (e.g., rudeness toward customers, spreading false rumors, and disregarding dress code requirements). However, the NLRB and the court found that Starbucks did not uniformly apply these rules, and that lesser disciplines were imposed on other employees for comparable or more severe infractions. This inconsistency in disciplinary practice often proves fatal in “mixed-motive” or “pretext” termination cases. - After-Acquired Evidence Defense
One of Starbucks’s defenses was that, even if the terminations were tainted by anti-union animus, newly discovered evidence (recordings of coworkers and customers, allegedly made without consent) would have justified firing the employees anyway. The law recognizes that certain wrongful behavior by an employee—discovered after the employer has terminated them for illegal reasons—can limit or preclude reinstatement. However, the Board concluded (and the Third Circuit affirmed) that Starbucks knew of the recordings before the termination decisions and declined to act on that knowledge at the time. Hence, the recordings did not qualify as “after-acquired” evidence. - Constitutional Challenge to ALJ Removal Protections
Starbucks additionally claimed that the layered “for-cause” removal protections for ALJs violated Article II of the Constitution by insulating them from direct presidential control. Because Starbucks did not raise this argument before the Board, the Third Circuit held that it lacked jurisdiction to entertain the constitutional claim under the strict exhaustion requirement of the NLRA. Even had jurisdiction existed, the court found no evidence of any injury traceable to the ALJ’s removal safeguards. - Damages and Remedies
The Board’s order required Starbucks to:- Reinstate the terminated baristas.
- Provide backpay (covering wages lost from the time of unlawful termination to reinstatement).
- Compensate for direct, foreseeable pecuniary harm (e.g., job-search expenses).
The Third Circuit vacated the portion of the Board’s order that compelled compensation for “any direct or foreseeable pecuniary harms” beyond lost wages, reasoning that such an expanded approach exceeded statutory authority. This development underscores an ongoing tension between the Board’s desire to make employees whole and judicial interpretations that confine the scope of permissible remedies.
Implications for Businesses and Employers
- Reinforcement of NLRA Protections
This ruling reaffirms the broad protections that the NLRA extends to employee communications about workplace conditions, wages, and union activity. Employers must remain cognizant that adverse actions—even if nominally taken for legitimate reasons—may be held unlawful if motivated, in part, by hostility to concerted activity. - Consistency in Application of Policy
NLRB v. Starbucks Corp. shows how a lack of consistent, transparent enforcement of company policies can be construed as pretextual. When employers discipline employees inconsistently, or without following their own procedures, an inference arises that the stated basis for the action is not the true reason. This can expose companies to remedial orders, litigation expenses, and reputational harm. It is crucial to keep detailed records of performance issues and to enforce policies fairly across all personnel. - Documentation of Disciplinary Actions
Thorough documentation is key. If an employee’s conduct is severe enough to warrant discharge, the employer should record the nature of the problem, its impact on the business, and how the violation aligns with internal policy. This ensures that, in the event of NLRB or court scrutiny, the employer can show that it would have applied the same discipline in the absence of union-related conduct. - After-Acquired Evidence: Limitations and Risks
Businesses often assume that newly discovered employee misconduct will shield them from comprehensive liability even if an initial termination decision was unlawful. Starbucks clarifies that the employer must not only prove the employee’s misconduct but also prove that it had no prior knowledge of it before termination. Additionally, employers must be able to demonstrate that they would indeed have fired a similarly situated employee for the same offense. The case highlights how knowledge possessed by one member of management can be imputed to the employer as a whole. - Policy Review and Training
Employers should review their employee handbooks, codes of conduct, and disciplinary procedures to ensure that they comply with federal and state laws—particularly those relating to protected activity, privacy, and consistent policy enforcement. Management and human resource teams must be trained to identify protected employee communications and to follow internal guidelines scrupulously when taking corrective or disciplinary measures. - Proactive Employee Relations and Union Avoidance Strategies
While union organizing remains a lawful right, employers interested in maintaining a collaborative relationship with the workforce can adopt proactive measures: creating channels for open communication, responding promptly to employee concerns, and ensuring that management does not disparage or punish employees for legitimate discussions on workplace issues. By doing so, businesses not only reduce the risk of formal charges but also foster a more engaged workforce.
Implications for Individuals Involved in Business
For Managers and Supervisors
Front-line managers, shift supervisors, and district managers must tread carefully in all communications with employees, especially those engaged in workplace petitions or demonstrations. NLRB v. Starbucks Corp. illustrates how personal emails or casual verbal remarks—if colored by hostility or dismissiveness toward organizing—can later become compelling evidence in an unfair labor practice charge.
- For Executives and Corporate Officers
Corporate officers must stay attuned to decisions made at the store or regional level. The Starbucks ruling underscores that knowledge possessed by any part of the management team can be imputed to the entire enterprise. Corporate officers should ensure that internal investigations into policy violations are consistent across the organization and are not used selectively to penalize labor activity. - For Employees and Organizers
On the employee side, the decision reaffirms that the NLRA offers meaningful protection for union advocacy and concerted efforts to improve workplace conditions. However, employees who engage in protected activities should remain aware that overt misconduct—such as insults to customers—may still jeopardize their position if the employer enforces policies consistently.
Conclusion
The NLRB v. Starbucks Corp. decision offers valuable guidance for businesses seeking to harmonize their disciplinary policies with the statutory rights of employees. It underscores the risks companies face when disciplining or terminating individuals who engage in concerted activity under the NLRA. Employers should employ clear, uniformly applied policies, carefully document performance issues, and communicate transparently to mitigate litigation risks.
From a larger perspective, the case also highlights the NLRB’s willingness to pursue broad remedies when it finds employer violations, albeit constrained by federal appellate oversight. The continuing evolution of NLRB remedial orders, particularly around compensation for pecuniary harms, ensures that employers and their counsel must remain vigilant. Ultimately, NLRB v. Starbucks Corp. reminds the business community that lawful labor relations strategies, solid policy enforcement, and consistent disciplinary measures are paramount to reducing liability, preserving goodwill, and fostering a productive work environment.
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References
1. Axon Enterprise, Inc. v. Federal Trade Commission, 598 U.S. 175, 143 S. Ct. 890, 215 L. Ed. 2d 151 (2023).
2. Collins v. Yellen, 594 U.S. 220, 141 S. Ct. 1761, 210 L. Ed. 2d 432 (2021).
3. Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477 (2010).
4. Lucia v. SEC, 585 U.S. 237, 138 S. Ct. 2044 (2018).
5. McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995).
6. MCPC, Inc. v. NLRB, 813 F.3d 475 (3d Cir. 2016).
7. NLRB v. Starbucks Corp., 125 F.4th 78 (3d Cir. 2024).
8. Somerset Valley Rehabilitation & Nursing Ctr., 362 N.L.R.B. 961 (2015), enforcement granted sub nom. 1621 Route 22 W. Operating Co., LLC v. NLRB, 825 F.3d 128 (3d Cir. 2016).
9. Wright Line, 251 N.L.R.B. 1083 (1980).
10. 29 U.S.C. § 158 (2018).