Chipotle Workers Say Obama Overtime Rule Means They’re Owed Pay

By Jon Steingart

A group of Chipotle Mexican Grill Inc. workers say the fast-food chain owes them time-and-a-half pay under the Obama administration overtime rule that a federal judge in Texas put on hold last year ( Alvarez v. Chipotle Mexican Grill, Inc. , D.N.J., docket no. not available, complaint filed 6/7/17 ).

The workers allege in a complaint filed June 7 in federal court in New Jersey that the company is required to comply with the Fair Labor Standards Act regulation, which the Department of Labor estimated would have made about 4.2 million workers newly eligible for overtime pay. The rule more than doubled the salary threshold under which employees are automatically eligible for overtime.

The workers say the regulation went into effect as scheduled Dec. 1, even though Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas granted a preliminary injunction Nov. 22. He said the DOL and its Wage and Hour Division were “enjoined from implementing and enforcing” the overtime rule.

Joe Sellers, a lawyer for the workers, told Bloomberg BNA that “the Administrative Procedure Act provides that rules, once they are issued for final publication with an effective date, automatically go into effect on that date unless the court issues a final adjudication vacating that rule.” The DOL published the final rule May 23, 2016.

“The rule automatically goes into effect,” said Sellers, a partner with Cohen Milstein Sellers & Toll PLLC in Washington. “The Department of Labor doesn’t implement the rule. The rule goes into effect on its own.”

In terms of legal procedure, Mazzant’s injunction isn’t considered a final adjudication. A motion for summary judgment, which would be a final adjudication if granted, is pending in Mazzant’s court. Meanwhile, an appeal of the preliminary injunction the DOL initiated under President Barack Obama is pending in the U.S. Court of Appeals for the Fifth Circuit.

Did Rule Take Effect?

Paul DeCamp, a former administrator of the DOL’s Wage and Hour Division under President George W. Bush, said the rule didn’t take effect. “The whole purpose of issuing the injunction was to prevent the rule from going into effect in the first place,” he told Bloomberg BNA June 7. “Otherwise, there would have been no purpose in issuing the injunction.”

“The argument that the plaintiffs seem to be making is a reach,” DeCamp said.

“The injunction bars not only the enforcement but the implementation of the regulation in the first place. It means that the final rule that was issued in 2016 never became effective,” he said. DeCamp now represents employers in wage-and-hour matters as a principal in the Washington, D.C., region office of Jackson Lewis P.C.

Chipotle denied wrongdoing. “I’d note that all of our employment practices are compliant with applicable laws,” Chris Arnold, a Chipotle spokesman, told Bloomberg BNA in an email. “I would also note that a lawsuit is nothing more than allegation, and is proof of absolutely nothing.” He declined to comment in greater detail because the litigation is ongoing.

The lawsuit comes as the DOL mulls whether to continue its appeal of Mazzant’s decision. It plans to seek public input on what to do with the rule, Labor Secretary Alexander Acosta told lawmakers June 7 at a House Appropriations subcommittee hearing on the department’s budget. Critics of the overtime rule said it would likely force businesses to cut jobs to meet rising payroll costs.

The next deadline in the DOL’s appeal of Mazzant’s injunction is June 30. The DOL under President Donald Trump asked for and received delays in the proceeding to allow incoming leadership time to evaluate the agency’s position.

In addition to Sellers, Miriam Nemeth of Cohen Milstein in Washington represents the workers. They’re joined by Justin Swartz and Melissa Lardo Stewart with Outten & Golden in New York City and Glen Savits with Green Savits LLC in Florham Park, N.J.

—With assistance from Chris Opfer.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

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