Will Chipotle’s $20M Workers’ Rights Settlement Impact the Franchise Industry? | Franchise News

In the largest Fair Workweek settlement in the U.S., Chipotle Mexican Grill agreed to pay approximately $20 million to about 13,000 workers in New York City after an investigation found Chipotle violated workers’ rights to paid sick leave and predictable schedules. Chipotle will also pay $1 million in civil penalties.

Though Chipotle’s 3,000-plus stores are all corporate owned, restaurant franchisors should be watching closely as this case can be viewed as part of an ongoing trend of worker-side victories over the past five to 10 years, said Raymond Berti, a partner in Akerman’s Labor and Employment Practice Group in New York.


Raymond Berti, a partner in Akerman’s Labor and Employment Practice Group in New York, focuses on employment litigation and counseling.

“We have seen a variety of worker-friendly laws get passed at the state and local level across the country,” Berti said, “from paid family leave laws to whistleblower protection laws to laws that prohibit companies from considering factors like criminal arrest and/or credit history information when making employment decisions.”

Outside of New York City, only Oregon and fewer than 10 local governments have enacted fair workweek—also called “predictive scheduling”—laws, which are typically limited to larger employers in the hospitality and retail industries.

While enforcement of these laws have been fairly limited to date, “this settlement might embolden labor and employment departments across the country to investigate and/or prosecute similar violations,” Berti warned.

This news coincides with notable momentum in the labor movement, especially in the hospitality and retail industries such as Starbucks and Amazon. At least part of the reason New York City commenced its multiyear investigation into Chipotle’s employment practices can be attributed to union activity, Berti said; specifically, complaints filed by 160 Chipotle employees and by labor union 32BJ SEIU, which New York City Mayor Eric Adams called out in his public remarks about the settlement.

“Today’s settlement with Chipotle is not only a victory for workers by securing up to $20 million in relief for approximately 13,000 workers,” Adams said, “but also sends a strong message, as the largest worker protection settlement in New York City history, that we won’t stand by when workers’ rights are violated. I thank 32BJ SEIU for helping uncover these violations and the Department of Consumer and Worker Protection for getting justice for these workers.”

In June, Chipotle workers at a restaurant in Augusta, Maine staged a walkout and filed a petition for a union election, which was a first for the burrito chain. Chipotle announced it was closing the location permanently in July, citing unfixable staffing issues.

Related: Are Franchises Next for a Starbucks-Style Union Push?

Though it may seem obvious, franchisors should make a point to stay informed and up to date regarding the laws that affect them and their workers, Berti said, noting it is not uncommon for him to hear employers say they were unaware of certain laws they apparently violated and are being investigated or sued for.

Plus, labor and employment laws have been rapidly changing over the past few years, “and they will continue to do so,” he said—especially in more progressive cities such as New York, Chicago, Los Angeles, Portland, San Francisco and Seattle.

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