Case Study: Unauthorized Immigrant Workers at Chipotle MexicanGrill Restaurants In 2015, Chipotle Mexican Grill acknowledged thatit was still under investigation by the Securities and ExchangeCommission and the U.S. attorney for the District of Columbia forpossible failure to comply with laws on employee work eligibility.“It is not possible to know at this time,” the company stated inits annual report to shareholders, “whether the company will incur,or to reasonably estimate the amount of, any fines, penalties orfurther liabilities in connection with these matters.” Chipotle’stroubles with immigration had begun four years earlier, whenfederal agents had descended on dozens of Chipotle Mexican Grillrestaurants around the country, from Los Angeles to Atlanta,interviewing employees and managers. Their purpose was to determinewhether—and to what extent—the fast-food chain was hiringunauthorized immigrant workers in violation of U.S. law. Chipotlewas a fast-growing chain of restaurants specializing in burritos,tacos, and salads made on premises from fresh ingredients. Foundedin Colorado in 1993 by chef Steve Ells, at the time of theimmigration raids the company owned more than 1,200 restaurants in41 states, Ontario, London, and Paris. Chipotle employed 31,000people, 92 percent of whom were hourly employees. Operating underthe slogan “Food with Integrity,” the chain reported $2.27 billionin revenue and 11 percent sales growth in 2011, despite thestruggling economy. Some analysts believed that one of the reasonsfor Chipotle’s strong performance was, as the news service Reutersput it, its “uncanny ability to hold down labor costs.” Undergovernment rules, foreign-born individuals are permitted to worklegally in the United States under some conditions. They can obtaina green card, a work permit issued to permanent residents (most ofwhom are close relatives of U.S. citizens). Highly skilled workersin short supply can apply for an H-1 visa. Low-skilled workers canapply for an H-2 visa for temporary, seasonal work; however, theseare available to only about 1 percent of the unauthorizedpopulation. When hiring, employers are required to fill out andkeep on file an I-9 form, documenting a person’s eligibility towork, and present it to government investigators if asked. Abouthalf a million undocumented immigrants entered the United Statesevery year during the past decade, two-thirds by crossing theMexican–U.S. border and the rest by overstaying temporary visas.The Pew Research Center estimates there are 8.1 undocumentedimmigrants in the U.S. workforce, about 5 percent of the total.Three-quarters of them are Hispanic, mostly from Mexico but alsofrom Central and South America. The main reason they immigrate isfor economic opportunity; studies show, for example, that a Mexicanman with a high school education can make two and a half times asmuch in the United States as in his home country, even after takinginto account differences in the cost of living. Most takelow-skilled jobs in a small number of occupations and industries.Fully a quarter of farmworkers in the United States—and about afifth of building and grounds maintenance workers—are undocumentedimmigrants. In the restaurant industry, they make up 12 percent offood-preparation workers and servers nationally—and much more insome regions, such as southern California. A study by the FoodChain Workers’ Alliance found that undocumented workers earned amedian hourly wage of $7.60 (compared with about $10 for otherworkers in the food industry) and were more than twice as likely toexperience some kind of wage theft, such as unpaid hours.Forty-four percent of undocumented workers in the food industrywere actually earning less than minimum wage. Over the past decade,government policy toward people working in the United Statesillegally has undergone a sharp about-face. Under President GeorgeW. Bush, Immigration and Customs Enforcement (ICE), a division ofthe Department of Homeland Security, conducted a series ofhigh-profile raids of factories, targeting foreign workers who wereunable to produce authentic work papers. For example, in 2008, ICEagents arrested and deported hundreds of workers at a meatpackingplant in Iowa. The Obama administration took a different approach,focusing its enforcement efforts on employers. ICE began conductingI-9 audits, checking businesses to make sure their employees’papers were in order. The Social Security Administration also beganinvestigating situations where Social Security numbers provided byemployees did not match their records (in the case of illegalworkers, these numbers were often fictitious). If the agents foundevidence of problems, they ordered that employers comply with thelaw—and in some cases imposed fines or even brought criminalcharges against managers. Chipotle was not the only employertargeted by these investigations. For example, American Apparel, agarment company based in Los Angeles, terminated 1,800 undocumentedworkers after an ICE audit found widespread irregularities. At L.E.Cooke Company, a family-owned nursery in California’s CentralValley, the owner was forced to fire 26 of his 99 employees who hadentered the country illegally. Many had worked for the nursery formany years and had specialized skills. “Telling them was probablythe worst day of my life,” the owner said. “I don’t just sit at adesk here, I’m actually out in the fields harvesting with them.” Asit awaited resolution of the government investigations, Chipotle’smanagement took steps to tighten up its employment procedures. Inaddition to terminating workers it found to be undocumented,Chipotle ordered all its restaurants to use the federal E-Verifysystem, even in states where this was not required. (E-Verify is anonline system that compares information from a new employee’s FormI-9 to social security and homeland security data to confirm workeligibility.) It also adopted an electronic Form I-9 to reduceerrors. But the company’s CEO acknowledged that its systems werenot foolproof. “Whatever systems you have for anything really,there are always going to be people who try to game the system,” hesaid. “But I think that we are going above and beyond . . . toensure that we are complying with the immigration [laws].” Sources:Food Chain Workers’ Alliance, The Hands That Feed Us: Challengesand Opportunities For Workers Along the Food Chain, June 6, 2012,at www.foodchainworkers.org; Restaurant Opportunities CentersUnited (ROC), Behind the Kitchen Door: A Multi-Site Study of theRestaurant Industry, February 14, 2011, at http://rocunited.org;“Chipotle’s Undocumented Worker Problem Resurges,” BloombergBusinessweek, May 24, 2012; “Chipotle Under Investigation forImmigration Law Violations,” May 23, 2012, at www.marketplace.org;Gordon H. Hanson, “The Economics and Policy of Illegal Immigrationin the United States,” Migration Policy Institute, December 2009;Pew Research Center, “5 Facts About Illegal Immigration in theU.S.,” November 18, 2014; Chipotle Mexican Grill annual reports atwww.chipotle.com; and news reports appearing in The Wall StreetJournal, The New York Times, and reuters.com. Case Study Questions- Respond using a minimum of 3 to 4 complete sentences eachquestion. Do you consider being an unauthorized immigrant a form ofworkplace diversity? Why/why not? How is it similar to anddifferent from other kinds of workplace diversity discussed inchapter 16? What are the benefits and risks to employers, such asChipotle and others mentioned in this case, of hiring unauthorizedimmigrants—whether or not they do so knowingly? Other thanemployers, which stakeholders are helped and which are hurt when abusiness hires unauthorized immigrants? Do you agree with thepublic policies and enforcement strategies described in this case?Why/why not? What changes in both would you recommend? Do you agreewith Chipotle’s response to the government’s enforcement effort?What else should Chipotle’s managers do now, and why?