Reference no: EM131682070

Question:Unauthorized Immigrant Workers at Chipotle Mexican Grill Restaurants

In May 2011, federal immigration agents descended on dozens of Chipotle Mexican Grill restaurants around the country, from Los Angeles to Atlanta, interviewing employees and managers. Their purpose was to determine whether-and to what extent-the fast-food chain was hiring unauthorized immigrant workers in violation of U.S. law. It was just the latest salvo in an ongoing government investigation of employment practices at the burrito chain. "We've got nothing to hide," said the company's attorney. "We're absolutely convinced that nobody did anything wrong." Chipotle was a fast-growing chain of restaurants specializing in burritos, tacos, and salads made on premises from fresh ingredients. Founded in Colorado in 1993 by chef Steve Ells, in 2011 the company owned more than 1,200 restaurants in 41 states, Ontario, London, and Paris. Chipotle employed 31,000 people, 92 percent of whom were hourly employees. Operating under the slogan "Food with Integrity," the chain reported $2.27 billion in revenue and 11 percent sales growth in 2011, despite the struggling economy. Some analysts believed that one of the reasons for Chipotle's strong performance was, as the news service Reuters put it, its "uncanny ability to hold down labor costs." Under government rules, foreign-born individuals are permitted to work legally in the United States under some conditions.

They can obtain a green card, a work permit issued to permanent residents (most of whom are close relatives of U.S. citizens). Highly skilled workers in short supply can apply for an H-1 visa. Low-skilled workers can apply for an H-2 visa for temporary, seasonal work; however, these are available to only about 1 percent of the unauthorized population. When hiring, employers are required to fill out and keep on file an I-9 form, documenting a person's eligibility to work, and present it to government investigators if asked. About half a million undocumented immigrants entered the United States every year during the past decade, two-thirds by crossing the Mexican-U.S. border and the rest by overstaying temporary visas. The Pew Research Center estimates there are 8.3 undocumented immigrants in the U.S. workforce, about 5 percent of the total. Three-quarters of them are Hispanic, mostly from Mexico but also from Central and South America. The main reason they immigrate is for economic opportunity; studies show, for example, that a Mexican man with a high school education can make two and a half times as much in the United States as in his home country, even after taking into account differences in the cost of living. Most take low-skilled jobs in a small number of occupations and industries.

Fully a quarter of farmworkers in the United States-and about a fifth of building and grounds maintenance workers-are undocumented immigrants. In the restaurant industry, they make up 12 percent of food-preparation workers and servers nationally-and much more in some regions, such as southern California. A recent study by the Food Chain Workers' Alliance found that undocumented workers earned a median hourly wage of $7.60 (compared with about $10 for other workers in the food industry) and were more than twice as likely to experience some kind of wage theft, such as unpaid hours. Forty-four percent of undocumented workers in the food industry were actually earning less than minimum wage. Over the past decade, government policy toward people working in the United States illegally has undergone a sharp about-face. Under President George W. Bush, Immigration and Customs Enforcement (ICE), a division of the Department of Homeland Security, conducted a series of high-profile raids of factories, targeting foreign workers who were unable to produce authentic work papers. For example, in 2008, ICE agents arrested and deported hundreds of workers at a meatpacking plant in Iowa. The Obama administration took a different approach, focusing its enforcement efforts on employers.

ICE began conducting I-9 audits, checking businesses to make sure theiremployees' papers were in order. The Social Security Administration also began investigating situations where Social Security numbers provided by employees did not match their records (in the case of illegal workers, these numbers were often fictitious). If the agents found evidence of problems, they ordered that employers comply with the law-and in some cases imposed fines or even brought criminal charges against managers. Chipotle was not the only employer targeted by these more recent investigations. For example, American Apparel, a garment company based in Los Angeles, terminated 1,800 undocumented workers in 2009 after an ICE audit found widespread irregularities. At L.E. Cooke Company, a family-owned nursery in California's Central Valley, the owner was forced to fire 26 of his 99 employees who had entered the country illegally. Many had worked for the nursery for many years and had specialized skills. "Telling them was probably the worst day of my life," the owner said. "I don't just sit at a desk here, I'm actually out in the fields harvesting with them." At Chipotle, after an earlier probe in 2010 in Minnesota, the burrito chain dismissed around 450 workers who could not confirm their eligibility to work.

The departures forced the company to hire new workers and supervisors to keep operations running. As the audits spread to other Chipotle locations, many workers quit, apparently leaving before they could be fired. In addition to dismissing illegal workers, the company also took steps to improve its document review procedures and started using e-Verify, a web-based system that helped employers confirm an individual's eligibility to work, even in states where it was not mandatory. Even so, Chipotle's managers were clearly concerned about the possible repercussions of the government's actions. In a section in its 2011 annual report to shareholders describing future risks, the company noted: "Although we require all workers to provide us with government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers. This may subject us to fines or penalties, and we could experience adverse publicity that negatively impacts our brand and may make it more difficult to hire and keep qualified employees."

Discussion Questions

1. Do you consider being an unauthorized immigrant a form of workplace diversity? How is it similar to and different from other kinds of workplace diversity discussed in this chapter?

2. What are the benefits and risks to employers, such as Chipotle and others mentioned in this case, of hiring unauthorized immigrants-whether or not they do so knowingly?

3. Other than employers, which stakeholders are helped and which are hurt when a business hires unauthorized immigrants?

4. Do you agree with the public policies and enforcement strategies described in this case? If not, what changes in both would you recommend?

5. Do you agree with Chipotle's response to the government's enforcement effort? What else should Chipotle's managers do now, and why?