Chipotle Accused By Labor Watchdog Of Unlawfully Withholding Pay Raises From Unionized Workers

The National Labor Relations Board has accused Chipotle Mexican Grill, Inc. CMG of unlawfully withholding pay raises from unionized employees.

What Happened: The NLRB’s general counsel intends to file a formal complaint unless Chipotle resolves the allegations. The charges arise from claims by the International Brotherhood of Teamsters that Chipotle informed workers in Lansing, Michigan, that they would not receive raises given to other employees because they had unionized. Consequently, the pay increase was withheld, reported CBS News.

Employees at the Lansing location voted for union representation in July 2022, becoming the only Chipotle store in the U.S. to do so. The first contract is still under negotiation.

In a statement to CBS MoneyWatch, Chipotle asserted it has been “bargaining in good faith” and plans to resume negotiations this fall. The company did not directly address the NLRB’s allegations.

In April 2023, Chipotle settled a separate NLRB case by agreeing to pay $240,000 to workers affected by the closure of an Augusta, Maine, restaurant due to unionization efforts.

This latest issue could increase scrutiny on Chipotle’s labor practices and its outgoing CEO, Brian Niccol, who is set to join Starbucks Corp. SBUX in September, according to the report.

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Why It Matters: The allegations against Chipotle come at a time of significant leadership changes and stock performance fluctuations.

Niccol’s leadership at Chipotle saw the company’s stock rise by 650% over six years, as noted by analysts. However, his move to Starbucks has already boosted the coffee giant’s valuation by over $15 billion in a single day.

Despite recent challenges, some experts still view Chipotle as a strong investment opportunity. Stephanie Link, Chief Investment Strategist at Hightower Advisors, recently highlighted Chipotle’s potential despite a 20% drop in its stock since June.

Price Action: Chipotle Mexican Grill’s stock closed at $54.75 on Monday, up 1.94%. In pre-market trading, the stock is down 0.73%. Year to date, Chipotle’s stock has surged by 21.94%, according to data from Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote