Fast-casual taco and burrito chain Chipotle is on the receiving end of a class action lawsuit from its employees regarding a new federal law about overtime pay.
The Washington Post reports that the chain is accused of not paying overtime to staff who work more than 40 hours a week and who earn under $47,476 annually. Under a new federal law that was meant to take effect in December 2016, any workers in that category would earn time and a half for any work done beyond 40 hours per week. The law would be a major expansion to the number of workers — at Chipotle and beyond — who were entitled to overtime pay. Previously, only those earning under $23,660 were eligible for that time and a half pay.
But there’s a catch: Before the law was scheduled to take effect, an injunction was issued in a Texas court, blocking the Labor Department from enforcing the new rules, and that is the focus of this lawsuit.
Cohen Milstein Sellers & Toll, the firm behind the lawsuit, are arguing that the law did take effect on December 1, and that the injunction only prevents the Labor Department from enforcing it — specifically, they claim the injunction only stopped the Labor Department from imposing the law on certain Texas state employees. They argue that this means other groups (in this case, Chipotle workers) are still free to see that the law is enforced. The firm also points out that the workers should be able to make such complaints, since the rule hasn’t been found to be illegal. (An injunction simply prevents a law, or parts of it, from being enforced, and is not a judgment on whether or not a law is legally acceptable).
A Chipotle spokesperson told Eater that the company does not comment on pending legal cases, but said Chipotle follows applicable labor laws, noting that “a lawsuit is nothing more than allegations, and the filing of a suit is in no way proof of any wrongdoing.”
The lead plaintiff in the case is a 55-year-old New Jersey grandmother, Carmen Alvarez, who worked at an East Hanover, N.J., Chipotle from 2013 to 2017. She says Chipotle began paying overtime to her (and other staff) in November 2016, just before the law was set to take effect, but stopped promptly after the Texas injunction happened.
“I was crushed when Chipotle went back on its promise to pay me and other co-workers the overtime that we worked so hard for,” Alvarez said in a statement.
The Post notes that some other companies did the same, although others have boosted their overtime pay and stuck with it. That makes the situation more curious, since it means Chipotle voluntarily boosted overtime pay before it was legally required to, only to roll it back when it appeared to be no longer legally required. To roll back higher wages at a time of low unemployment (some in the restaurant industry say there aren’t enough workers to fill jobs) is unusual — if there aren’t enough workers to fill all the jobs, conventional wisdom would be that those workers are likely to be offered (or to demand and receive) better wages or conditions.
If the lawsuit is successful, the firm suggests that it could affect some 4.2 million workers, guaranteeing overtime pay not just to Chipotle staff, but anyone else who is eligible in other companies and industries.