Chipotle faces fresh federal scrutiny more than year after mass firing of Latinos in Minnesota
The SEC is scrutinizing the information Chipotle provided investors about the illegal worker scandal.
In December 2010, in the midst of an investigation by the federal Immigration and Customs Service, Chipotle made the controversial decision to suddenly fire about 450 Minnesota employees who couldn't prove they had valid work permits. The fired workers, mostly Latinos, represented over half of the fast-casual restaurant's Minnesota workers.
At the time, Chipotle executives argued they had no choice and by now they probably figured the episode was in the past, but this week, the Security and Exchange Commission subpoenaed information regarding the company's compliance with federal hiring laws and public disclosure requirements.
Businessweek reports that Chipotle could face fines as a result of the fresh investigation. The company has already spent upward of $1 million in legal fees related to the hiring practice probe, and its 2011 stock profits were hurt by about 8 cents a share due to the fact managers can no longer rely on cheap illegal labor.
Though fallout from the federal immigration probe most directly impacted Chipotle's Minnesota operation, the investigation subsequently looked into the restaurant's hiring practices in D.C., Virginia, Los Angeles, and Virginia. Chipotle has been "the highest-profile target of an Obama administration campaign against employers of illegal immigrants," the Wall Street Journal writes.
The SEC hasn't informed Chipotle as to the focus of its investigation, but an attorney for the company said a subpoena of this sort is typically aimed at ensuring that a company hasn't misled investors in its public disclosures.
Despite some bad PR, the probe hasn't slowed down the company. Last Friday, Chipotle's shares closed at $392.13, almost 18 times higher than their $22 debut in 2006. In the last year alone, Chipotle's shares have risen by more than 40 percent.
Furthermore, to ensure all Chipotle's new hires are legal workers, the company has implemented the Department of Homeland Security's E-Verify hiring system.
So, perhaps unsurprisingly, the real losers in this story are the 450 Minnesota Latinos who suddenly found themselves unemployed 17 months ago.
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