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By Ben Penn
Sept. 14 — Chipotle Mexican Grill is under attack from a lawmaker and thousands of employees for alleged “wage theft,” but the restaurant chain is mostly avoiding scrutiny from the agency that enforces federal overtime law.
The Labor Department’s Wage and Hour Division has concluded 18 investigations at Chipotle stores during the Obama administration, resulting in the company paying workers $17,279 for Fair Labor Standards Act violations, according to a Bloomberg BNA review of WHD enforcement data.
Those results pale in comparison with the agency’s audits of other national quick-service food companies. The 20 largest fast-food brands, excluding Chipotle, were subjected to an average of about 200 WHD audits each since January 2009, the data analysis found.
The enforcement results come as a group of 10,000 current and former Chipotle employees recently joined a class action claiming they were forced to work off-the-clock, leading to minimum wage and overtime violations.
Rep. Rosa DeLauro (D-Conn.) cited this lawsuit in a letter she sent the WHD Sept. 12, urging the division to “promptly investigate the corporation’s labor practices and policies.”
“We have received the letter from Rep. DeLauro and will respond to her in a timely manner,” Jason Surbey, a DOL spokesman, told Bloomberg BNA in a Sept. 13 e-mail.
DeLauro, when informed of the relatively small number of WHD investigations at Chipotle, told Bloomberg BNA Sept. 13, “I think if they’ve been practicing wage-and-hour theft, then we should do an investigation to figure out what it’s about.”
“We have maintained from the outset that this case is without merit and will vigorously defend our employment practices,” Chipotle spokesman Chris Arnold said, referring to the class action. “And we believe” DeLauro’s “call for an investigation is misdirected.”
The dearth of Chipotle investigations could be because the Denver-based company is unique among its comparably sized competitors in one significant way: All 2,000 Chipotle outlets are corporate-owned.
This means there are no Chipotle franchisees, a stark contrast to the top 20 brands, whose combined units are 93 percent franchised, according to data from a QSR magazine report in August.
The ownership structure could partially explain a minimal enforcement focus on Chipotle. WHD Administrator David Weil asserts that the franchising model contributes to FLSA noncompliance.
Before becoming administrator, Weil in 2010 recommended that the agency target franchisees, not corporate-run stores, when conducting fast-food investigations.
Over the course of the Obama administration, the WHD conducted nearly 4,000 investigations at the 20 largest fast-food brands combined, leading to discovery of more than 68,000 FLSA violations and to recovery of some $14 million in back wages for about 57,000 employees.
The number of investigations as a share of overall brand locations ranged from 1.7 percent at Pizza Hut to 6.9 percent at Sonic Drive-In. Only 0.9 percent of Chipotle locations were under WHD audit in this administration, the data reveal.
Kent Williams, one of the attorneys representing plaintiffs in the Chipotle class action, told Bloomberg BNA Sept. 13 that the limited number of WHD audits of Chipotle may stem from a couple of factors.
First, workers could be taking complaints to their state enforcement agency rather than the federal Labor Department, said Williams, a partner at the Williams Law Firm in Long Lake, Minn.
He also said Chipotle hourly employees are generally reluctant to bring wage-and-hour complaints, out of fear of retaliation.
“We do have instances, some of them documented, in which Chipotle did in our view retaliate against people for complaining about having to work off the clock, and that’s just complaining internally about it,” not filing with the DOL, Williams said.
Still, one of the WHD’s top priorities in this administration has been to conduct more proactive, agency-initiated investigations in sectors where data show it is unlikely workers will speak up about what they see as unfair practices.
The lawsuit against Chipotle, alleges the company’s time-keeping system results in employees continuing to work after they’ve been automatically clocked out.
A judge granted the plaintiffs’ motion for a national collective in August 2015, giving hundreds of thousands of Chipotle workers the chance to sign on ( Turner v. Chipotle Mexican Grill, Inc. , 2015 BL 270918, 123 F. Supp. 3d 1300 (D. Colo. 2015 )).
Earlier this summer, the plaintiffs’ attorneys filed a spreadsheet showing about 10,000 current and former Chipotle workers joined the lawsuit.
The company, through spokesman Arnold, told Bloomberg BNA Sept. 14 that the fact 10,000 workers have opted in “is not equivalent to a statement of wrongdoing.”
The Chipotle enforcement statistics were included in a spreadsheet the WHD updated Sept. 13. The numbers for the 20 biggest fast-food brands were analyzed prior to the agency’s quarterly update, meaning they don’t reflect cases added to the database in the past three months.
The data don’t reflect ongoing investigations or cases under pending DOL litigation, nor do they cover state or local audits.
Further, the number of enforcement cases at each fast-food brand doesn’t necessarily indicate the FLSA compliance rate at all stores in the chain.
Among those 18 Chipotle investigations captured in the data set, eight yielded zero FLSA violations, for a no-violation rate of 44 percent. The average no-violation rate of the top 20 fast-food brands was about 25 percent.
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