Chipotle, one of the nation’s most beloved fast-food brands, is about to pay $7.75 million to the State of New Jersey for widespread violations of child labor laws.
The terms of the settlement were released on Tuesday, Chiptole had been audited by the state for 30,000 alleged child labor law violations, the scope of which included having underaged workers not being given enough meal breaks and logging too many hours.
“This is a significant number of alleged violations by Chipotle and a notable settlement. The amount of the settlement should send a message to companies doing business in New Jersey that following child labor laws is something that the state takes as seriously as it should.”
The problem with these kinds of settlements is that there is almost an incentive for these massive companies to simply build in the prospect of future settlements and fines as part of their business model. While close to eight million dollars is a lot of money, Chipotle has a market cap of $47.3 billion and drew close to $8 billion in profit last year. In that light, the settlement with New Jersey isn’t even the equivalent of a parking ticket - perhaps it’s losing a nickel from your pocket when you take your keys out.
What can hurt Chipotle moving forward is exactly what made Chipotle - their rabid fans, many of whom pump up the brand daily on social media. Many of the influencers who love Chipotle and made them not only a successful fast food restaurant but an iconic brand are the exact age as the workers who were the subject of the New Jersey settlement. If enough of these social media stars turn on the Chipotle brand they helped create, no amount of actuarial work is going to cushion that financial blow for Chipotle..
For workers in New Jersey, increased scrutiny on Chipotle will surely resonate through the fast food industry. The allegations here against Chipotle are the status quo in the industry. Earlier this year, the federal Department of Labor took action against two dozen McDonald’s and Dunkin’ franchise locations in Vermont and New Hampshire for many of the same violations as Chipotle was alleged to have committed in New Jersey. In the federal action, these fast food giants were also allowing 14 and 15-year-old employees to run dangerous equipment they were not legally allowed to operate.
The reality is that as these food companies find it increasingly difficult to find workers to make their businesses run, they will look at this vulnerable segment of workers and be tempted to have them work hours and perform job tasks that are illegal.
The $7.75 million paid by Chipotle will, according to a press release by the New Jersey Department of Labor and Workforce Development, go into the NJDOL’s Child Labor Law Enforcement Trust Fund. The fund is used to enforce laws protecting children in the workplace, and to educate employers, employer organizations, employees, unions, teachers, counselors, and other professionals engaged in work involving minors.
About Aron Solomon
A Pulitzer Prize-nominated writer, Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital and 24-7 Abogados. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world. Aron has been featured in Forbes, CBS News, CNBC, USA Today, ESPN, TechCrunch, The Hill, BuzzFeed, Fortune, Venture Beat, The Independent, Fortune China, Yahoo!, ABA Journal, Law.com, The Boston Globe, NewsBreak, and many other leading publications.