Former Chipotle Employees Go After Company in Court

The E. coli and norovirus outbreaks at Chipotle Mexican Grill Inc. (NYSE: CMG) have been all over the business news pages in recent months. Less well-known are the company’s troubles with unhappy workers and investors.

The investor lawsuits were predictable. Anytime a company fouls up anything, the class action lawsuits start arriving in the mail.

But the company has also been hit with a slew of lawsuits alleging sexual harassment, failure to pay workers overtime and dicey hiring practices. Chipotle was even investigated in 2010 when it had to fire 450 undocumented workers, according to a report in the New York Post.

Like most other companies hit with lawsuits from disgruntled employees, Chipotle believes that most are driven by ambulance-chasing lawyers, not employees. A company spokesperson also told the Post that Chipotle has “a very successful track record defending these claims, with the vast majority of them either dismissed or resolved in our favor.”
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But last month the company paid $600,000 in a gender discrimination case to three Cincinnati women who were fired from their positions as general managers.

In September a class action suit was filed alleging that Chipotle violated the Fair Credit Reporting Act by requiring job applicants to sign a background check consent form that was embedded in a general consent agreement. According to the law, employers are required to use a separate form to obtain consent for consumer reports for potential employees.

The largest of the pending lawsuits may be a class action suit alleging that Chipotle failed to pay overtime to apprentices or assistant managers as required by the Fair Labor Standards Act. The suit alleges that Chipotle misclassified these jobs as exempt positions in order to avoid paying overtime.

Last week a former employee filed a suit against Chipotle and four store managers in Los Angeles alleging wrongful termination, sexual harassment, retaliation and discrimination. From the filing:

All four managers created a sexually charged atmosphere directed at female employees and customers. In fact, these Chipotle managers would use the security cameras to secure overhead views of female customers they found attractive. These four managers made constant sexual comments to [the plaintiff], refused to provide her a uniform shirt that fit her properly (preferring instead to provide her a shirt that was several sizes too small so it could accentuate her breasts), forcibly touched plaintiff and made inquiries about her intimacy with her husband.

Chipotle stock closed up about 2% Tuesday, at $471.76 in a 52-week range of $399.14 to $758.61. Shares were up slightly in Wednesday’s premarket trading session to $472.26.