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27 Aug, 2016 18:49

Under fire: Chipotle, Papa John, McDonald’s over ‘pervasive’ wage theft and discrimination

Under fire: Chipotle, Papa John, McDonald’s over ‘pervasive’ wage theft and discrimination

Federal regulators and states are finding fast food companies like Chipotle, McDonald’s and Papa John culpable of wage theft, worker intimidation and discrimination. A practice they say is “pervasive” in the industry.

Workers are fighting back, however, and finding support in the court and regulatory bodies.


In a case stemming from the use of social media to criticize of the burrito chain, Chipotle, the National Labor Relations Board (NLRB) found in favor of the employee and argued the company’s workplace policies were illegal. The finding on August 18 stems from a case “Chipotle vs. NLRB,” over an employee’s use of social media to criticize the burrito chain. 

In January 2015, tweets by Havertown, PA Chipotle employee James Kennedy criticized the company for paying workers $8.50 an hour while giving away free food, implying that this was an exploitative arrangement. He later took the tweet down when a supervisor informed him that the company’s social media policy prohibited employees from making “disparaging, false” statements about it online. Several weeks later, he was fired for organizing a petition protesting workers not getting their required breaks.

The manager claimed she fired him because she feared Kennedy, a three-time Iraq war vet with PTSD, might become violent. Kennedy filed his case with the NLRB shortly after that.

“Employees can talk about wages, hours, conditions and terms of employment. That’s protected speech,” Michael Healey, the attorney who worked on the NLRB case, told CNN.

The NLRB reviewed the case and agreed that Kennedy had been treated unfairly, with his firing connected to the petition as well as his earlier statements about wages on social media. The NLRB ordered Chipotle to offer to rehire Kennedy and pay him for lost wages.

Back in 2012, the NLRB warned employers that certain kinds of social media speech by employees are protected against retaliation or prohibition, including specific complaints about their workplace, including for example wages, hours, benefits or other conditions. In adjudicating cases the NLRB looks for a “connective thread” between statements from employees which show they are discussing shared concerns and at least considering collective action.

Chipotle profits fell this year due to an outbreak of norovirus and E. coli that sickened dozens in 2015. The US Attorney Office in California has broadened a criminal investigation into company-wide food safety matters. A Chipotle near Boston was closed when an employee was diagnosed with norovirus.

Chipotle also appears to have a sexism problem.

In August Chipotle agreed to pay $550,000 in compensation and damages for discrimination against an employee for being pregnant in a ruling in US District Court Washington, DC, according to Eater.

Back in 2011, the former Chipotle worker Doris Garcia Hernandez informed her manager she was pregnant. Following the disclosure, she claims the manager began restricting her water and bathroom breaks. Hernandez alleges that her boss required her to "announce" to other staff members when she needed to use the restroom and he would then "approve her bathroom breaks so that he could cover her work position for her." The manager also refused her requests to leave work and attend her prenatal doctor’s appointment. Hernandez chose to leave anyway and was publicly fired in front of other employees and customers the following day. The court found Chipotle had violated the Pregnancy Discrimination Act which forbids any discrimination based on pregnancy.

It is not the first time that Chipotle has been sued before for pregnancy discrimination. In February a federal grand jury in Cincinnati, Ohio, ruled in favor of three former managers who sued the company for gender discrimination citing sexist behavior and unfair firing due to pregnancy.


Earlier in August, a California labor lawsuit which claimed McDonald’s is responsible for how its franchisees manage their pay has been given the go-ahead to proceed as a class action lawsuit. Workers at five McDonald’s restaurants filed the lawsuit alleging the franchise owner, who had five restaurants, violated wages and hours laws, failed to pay overtime and failed to pay minimum wage.

The franchisee has already settled its portion of the lawsuit for approximately $700,000 but McDonald’s has also argued that it is not responsible for how franchisees operate their business or manage working conditions. Employees argue the company provide the overtime tracking software to the franchisees that purposely reduces overtime pay.

The New York Times reported US District Court, Northern California, Judge James Donate allowed the motion to continue as a class action lawsuit as he found employees reasonably believed McDonald’s was their employer. There are potential 400-500 employees that will be part of the class-action.


Other fast food operators have been found guilty of wage theft. After a year-long fight, New York’s attorney general has settled with Papa John pizza franchises when they agreed to pay $500,000 in back wages and damages to more than 200 employees.

“When businesses brazenly violate the law by systemically failing to pay their employees minimum and overtime wages, they rip of some of our state’s most vulnerable workers,” said New York attorney general Eric Schneiderman in a released statement. “I have called on corporate leaders in the fast food industry – including Papa John’s – to step up and stop these ongoing violations, who are so pervasive in this company and industry.”

Over the past two years, the Attorney General’s office investigated and found violations at eight separate Papa John’s franchises, which operated a total of 30 restaurants. The violations were all wage theft violations.

In a 2015 settlement over wage violations at 11 franchise locations, the judgement totaled almost $3 million. In a separate case, the owner of nine franchises in the Bronx was sentenced to pay $230,000 in restitution to workers, and the owner, Abdul Jamil Khokhar, was sentenced to serve 60 days in jail. The US Department of Labor also filed a judgement in federal court against the same franchise, recovered an additional $230,000 in damages and civil money penalties of $50,000.


The Wahlburgers chain, run by Hollywood actor Mark Wahlberg and his family, is accused in a class-action lawsuit of wage theft and violating state and federal labor laws, according to the Hollywood Reporter.

The lawsuit filed this month by five workers in the Coney Island franchise complained the company "maintained a pattern and practice of regularly shaving compensable time from the weekly hours of all its non-exempt employees, including servers, bartenders, bussers and kitchen staff, and paying them significantly fewer hours than they actually worked."

Specifically workers were paid a flat salary of $300 a week, not compensated for overtime, the company regularly kept employees’ tips, and staff were not paid for attending mandatory meetings.

The suit claims the family were made aware of the problems by employees but did not act.

The Boston-based chain is due to expand to 100 to 150 new stores over the next five years.

According to a Washington Post article in April 2015, many still view fast food work as an adolescent gig, as it was in the 1950s and 1960s. On the contrary they found 70 percent were over the age of 20 with average worker was 29 years old, and a third were graduates, the rest had high school diplomas, and many were single mothers and all trying to live on $9 an hour.