Chipotle could pay $8M under proposed settlement in overtime case

It would be the second such settlement this year for the fast casual, which agreed to pay $15 million in March to a group of workers who said they were wrongfully denied overtime pay.
Chipotle Mexican Grill
Photo: Shutterstock

A proposed $8 million settlement filed late last week could put an end to a nearly decade-long class-action lawsuit pitting more than 500 current and former managers-in-training against Chipotle Mexican Grill.  

A judge needs to approve the proposal, filed in district court for the Southern District of New York. It calls for the creation of a $1.9 million fund for those in the class, or a net average award of about $2,800 per person, as well as $6.1 million to pay attorneys’ fees and costs.

A Chipotle spokesman did not respond to a request to comment on the case Tuesday.

If approved, it would be the second such settlement for Chipotle this year. In March, Chipotle agreed to pay $15 million to put an end to a similar overtime dispute for a group of 4,838 workers who were wrongly classified as exempt from federal overtime rules. That case stemmed from a 2017 filing in which a worker said they were wrongly classified as exempt under the FLSA.

The legal wrangling in this case began in November 2012 when Maxcimo Scott filed a class-action complaint against Chipotle alleging violations of the Fair Labor Standards Act and the New York Minimum Wage Act. Amendments to the case were later filed in several states, including Illinois, Colorado, Missouri, Washington and North Carolina.

The original plaintiffs said they often had to do tasks that would be given by hourly workers while they were in salaried positions training to manage new Chipotle locations. Because of that, they asserted, they were entitled to overtime pay.

According to attorneys in the case, lost overtime wages for the group amounted to $4,145,018 calculated at time-and-a-half, assuming 10 overtime hours worked per week in 85% of workweeks.

Calculated under the fluctuating workweek method of the FLSA, which accounts for varying workweeks, plaintiffs’ attorneys estimate the lost wages amount to just over $1.1 million. “So the net recovery represents 100% of unpaid overtime wages plus 48% of liquidated damages,” according to court documents.

The case has had many twists and turns over the years. The parties participated in a settlement conference in 2015, but did not reach a resolution. A full-day mediation last November also ended without resolution, but the groups were able to come to an agreement a few days later. They then spent six months negotiating terms, according to court documents.

“The settlement was the result of eight years of robust litigation before both the district court, the Second Circuit and the Supreme Court, and substantial arm’s-length negotiations between experienced counsel assisted by a private mediator,” the filing said. “The Collective fund of $1,900,000 is substantial, especially in light of the considerable risks Plaintiffs and Collective Members faced.”

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