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Saturday, August 11, 2018

Arbitration Agreement Trims Nearly 3000 Wage Claims Against Chipotle

Arbitration Agreement Trims Nearly 3000 Wage Claims Against Chipotle
By Tommy Eden

As background, the United States Supreme Court’s recent ruling in Epic Systems Corporation v. Lewis resolved the question of whether employees and employers should be allowed to agree that any disputes between them will be resolved through one-on-one arbitration.” Epic Sys., 138 S. Ct. 1612, 1619 (May 21, 2018). The Court concluded that they should be permitted to do so and rejected the position that mandatory individualized arbitrations violate the National Labor Relations Act (“NLRA”) and are therefore unenforceable under the Federal Arbitration Act (“FAA”).”

In one of the very first lower court cases to be decided under this new standard, almost Chipotle 3000 workers sought to opt into a Fair Labor Standards Act (FLSA) collective action. The mandatory employee arbitration agreement signed by all Chipotle Mexican Grill employees prohibited class and collective action claims. Chipotle contended that the Arbitration Agreement serves a commercial purpose because it provides predictability in handling litigation matters and reduces dispute resolution costs. These benefits do not come at the expense of the employees, Chipotle maintained, because the Agreement provides that employees cannot be required to pay any cost of the arbitration that they would not be required to pay if the matter was heard in court. Further, Chipotle maintained that its decision to permit only individual claims is commercially reasonable because it allows all parties to realize the benefits of bilateral arbitration’s informality and many businesses have selected this route and the Supreme Court has ruled it lawful.

On August 6, a Colorado federal judge trimmed 2,814 opt-in Chipotle Mexican Grill workers from a collective action accusing the company of not paying hourly employees for off-the-clock work, pre and post-shift work they were required to perform, since they had signed the arbitration agreements that barred them from pursuing claims collectively.

Text Box: 3Common Sense Counsel: The Epic Systems case is truly a gift to employers who wish to engage in employment claims related risk reduction. Such a program increases the prospects that concerns will be resolved before they ripen into actual EEOC Charges, DOL Investigations, Lawsuits - you name your worst employment nightmare. In light of the emerging Supreme Court case law favoring alternatives to court litigation, consider options for designing an employee dispute resolution program and the potential business advantages - not the least of which is not having to spend a sunny day locked in a windowless room with a plaintiff’s attorney with an attitude. Plaintiff’s attorneys hate these programs for obvious reasons. The best programs have the following components: 1) an internal complaint process with a promise of no retaliation; 2) a toll free hot line for multiple location employers; 3) handbook provisions giving employees at least two channels to make their complaint and fair investigation process; 4) well drafted and broadly worded arbitration provision, covering class and collective claims, that will pass court scrutiny; 5) training for all employees on the process; 6) private arbitration panel of former local judges, or AAA Arbitration, and mostly importantly; 7) a Human Resource professional with a listening ear and risk reduction mindset.

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and can be contacted at or 334-246-2901. Blog at with link to case.