NYC Is Looking to Take a Bite Out of Chipotle

New York is looking to take a bite out the Chipotle Mexican Grill Inc. (NYSE: CMG) in a recent lawsuit filed against the burrito chain. The lawsuit alleges that Chipotle violated New York City’s Fair Workweek Law that went into effect in November 2017.

Over 30 employees from five different Brooklyn locations of Chipotle filed complaints with the Department of Consumer and Worker Protection (DCWP). Allegedly, Chipotle failed to give estimates of work schedules and schedules two weeks in advance.

The burrito chain allegedly did not get consent for last-minute schedule changes or ask employees to close the store one day and open the following day. The lawsuit also alleges that Chipotle did not give pay premiums for those schedule changes or for working “clopenings,” as they are known in the retail business.

Essentially, the lawsuit alleges that Chipotle also violated New York City’s Earned Safe and Sick Time Act. This requires employers give workers a minimum amount of time off from work when they need to use sick time for themselves or a family member.

The DCWP is seeking at least $1 million in restitution for workers plus civil penalties and future compliance with the requirements of the Fair Workweek Law. The city is also launching an investigation into allegations of similar violations at 11 Chipotle locations in Manhattan.

Laurie Schalow, Chipotle’s chief reputation officer, commented:

With respect to the Fair Workweek Law, Chipotle has been working cooperatively with the city to ensure we have systems and processes in place to comply with the law, so we believe the filing of charges was unnecessary. Regardless, we will continue to cooperate with the city and we are addressing any prior noncompliance concerns.

Shares of Chipotle traded down about 5% on Tuesday to $796.83, in a 52-week range of $383.20 to $857.90. The consensus price target is $781.69.