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Chipotle will pay a $240,000 penalty — roughly 1% of its daily revenue— for shutting down a store that tried to unionize

People walk past a Chipotle restaurant in NYC.Chipotle agreed to pay $240,000 to former workers at an Augusta, Maine, restaurant who tried to form a union.

Andrew Renneisen/Getty Images

  • Chipotle is paying $240,000 to former employees who tried to form the chain’s first union.
  • The restaurant violated labor laws when it closed the chain a month later, federal regulators found.
  • The settlement is equivalent to the global revenue that Chipotle made in 15 minutes last year.

Chipotle has agreed to pay $240,000 to workers of a location it closed after workers there tried to form a union. 

Chipotle agreed to the fine, which will be split among the former employees of the Augusta, Maine, location, a Chipotle spokesperson confirmed to Insider on Monday. The news was earlier reported by the Kennebec Journal of Augusta. 

The employees filed a petition to form a union last June — the first time Chipotle employees had taken that step. The following month, Chipotle said it would close the location, citing problems recruiting enough employees to run the location, CNBC reported. According to the Kennebec Journal, the National Labor Relations Board later found that the closure violated labor laws.

The payment will be split among the former location’s employees, who will receive between $5,800 and $21,000 each based on their seniority, pay rate, and other factors, per the Journal.

According to the company’s latest earnings report, Chipotle’s revenue from food and beverage totaled $8.56 billion in 2022, or about $23,446,578 a day. The $240,000 fine is roughly 1% of Chipotle’s daily revenue. That math is based on Chipotle locations operating daily, and doesn’t include locations closed on major holidays.

Under the settlement, Chipotle will also offer the employees “preferential hiring” if they pursue jobs at the company’s other locations in Maine.

The restaurant chain will also post notices in about 40 locations in Maine, Massachusetts, and New Hampshire stating that it will not close stores or discriminate against employees if they support a union, CNBC reported.

Laurie Schalow, Chief Corporate Affairs Officer at Chipotle, told Insider in a statement that the company agreed to the settlement “not because we did anything wrong, but because the time, energy, and cost to litigate would have far outweighed the settlement agreement.”

“We respect our employees’ rights to organize under the National Labor Relations Act and are committed to ensuring a fair and just work environment that provides opportunities to all,” Schalow said.

Chipotle United, which would have represented the employees if the union effort had gone forward, did not immediately respond to Insider’s request for comment on the settlement.

Employees at a Chipotle store in Lansing, Michigan, held an election and voted to unionize last summer, becoming the chain’s first location to organize a union successfully, CNBC reported at the time.

The unionization effort at Chipotle came as workers at Starbucks successfully organized unions at hundreds of that chain’s stores. Workers United represents employees at roughly 250 of its stores in the US. The coffee chain has also faced allegations of union-busting from the NLRB, and former CEO Howard Schultz said he doesn’t think unions have a role to play at the company.

Read the original article on Business Insider
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