Chipotle Settles Unpaid Overtime Collective Action for $2 Million

Misclassifying workers as exempt from overtime is one of the most common ways employers avoid paying overtime compensation.

The federal Fair Labor Standards Act (FLSA) defines overtime as all time spent working after eight hours a day or forty hours a week. The FLSA requires employers to pay all hourly workers one and one-half times their normal hourly rate for all overtime worked. There are exceptions to this rule, but the law is very specific about the types of employees that can qualify for the exemption.

Under the FLSA, only employees who work in an administrative, executive, or professional capacity are eligible for the overtime exemption, but the exemption requires more than just a label.

The law states that only employees who perform primarily office work and provide administrative assistance directly to an executive are eligible for overtime exemption under the administrative category. In order to qualify for the executive category, an employee must spend the majority of her time managing other employees, be able to discipline those employees, and have direct say in the hiring and firing of employees. The professional category consists of all those workers whose jobs require a particular set of skills or level of education to complete, such as doctors and musicians.

The executive category is the most abused. Many employers will classify any manager or assistant manager as exempt from overtime, even if they have most of the same responsibilities as hourly workers. This was allegedly the case at various Chipotle restaurants all over the country.

According to the lawsuit, Chipotle would allegedly promote crew members to positions such as apprentice manager, then label them exempt from overtime. The lawsuit alleges the work the employees did essentially stayed the same, but the number of hours per week they were expected to work increased by about 50 percent. When other employees called in sick or could not make it to work, those in management positions were expected to work the extra hours without the extra pay.

Other hourly employees who did not work in management positions allege they were regularly required to perform work off the clock, including cleaning the store after hours or attending mandatory meetings outside their shift.

The lawsuit further alleges employees were denied breaks throughout the day. In addition to the FLSA, each state has their own laws regulating things like minimum wage and overtime. California labor law requires employers to provide all hourly workers with breaks throughout the day, including a paid ten-minute rest break for every four hours of work and an unpaid meal break lasting at least half an hour for every five hours worked. The lawsuit alleges hourly workers were denied these breaks.

The lawsuit was originally filed in Los Angeles, but more than 38,000 current and former employees of the Mexican restaurant have since joined the wage and hour collective action lawsuit. The parties have agreed to settle the lawsuit for $2 million, and since the court recently approved the settlement, class members can expect to see their checks soon.

