Chipotle Mexican Grill has become the latest restaurant chain to pay the price for violating worker protection laws.

In this case, a settlement was reached in August, potentially worth over $20 million, for Chipotle’s disregarding of scheduling and sick leave laws in its New York City’s stores. Violations cited went back as far as 2017 and affected some 13,000 workers.

Chipotle is not the only restaurant employer to have gotten stung by similar violations. Complaints against the restaurant industry for employment discrimination have surged in the past year as pressures of high turnover and have stepped up during its COVID recovery.

Even before the pandemic, the industry was the source of more employment discrimination complaints with the U.S. Equal Employment Opportunity Commission (EEOC) than any other.  Between April 16, 2020 and Sept. 21, 2022, 355 state and federal workplace lawsuits (mainly employment discrimination) had been lodged against hospitality employers—78 of them in the last 30 days of that period. 

Such complaints can cover sexual harassment, discriminatory practices, wrongful termination, wage and hour violations and more. They are bad for a brand and bad for business and can have a cost outside of potential fines and penalties. 

An organization that routinely receives such complaints may pay the price in their employment practices liability insurance. A poor risk profile, especially in the face of claims, will have underwriters looking for material changes in the EPL program accompanied by premium increases. 

4 best practices to guard against EPL claims and EEOC actions

Following best practices is the most effective defense against costly EPLI claims and potential EEOC actions and fines. Here are four of them.

Keep your communication lines open. When communications break down, EPLI claims tend to mount. Employees need to know how to report inappropriate and discriminatory behavior and acts. A swift and thoughtful response to complaints, will lessens the likelihood of a future claim.

Formalize policies and procedures. Policies for how employees are to be treated should be in writing, preferably in an employee handbook. It is best if they’re revisited annually to reflect any legal and regulatory changes. They must spell out workers’ rights and recourses. Other aspects that are key to include: Reporting protocols, which formalize how employees can lodge a complaint, report inappropriate behavior and the avenues to do so; and investigation procedures. These detail who performs investigations, how they are conducted and when they are typically completed.

Document everything. Every employee complaint or request should be documented in writing. Written policies and documentation are critical to the employer’s defense in the event of a claim. A separate investigation file should include all written correspondence. Verbal communications should be summarized in emails to the employee. All investigations should include a written conclusion, whether the allegations had merit or not.

Training counts. Employees need clear instruction on what constitutes harassment, discrimination or retaliation, and managers need training on how to handle complaints. Training often falls short on disability discrimination. Managers and supervisors need to understand what questions are permissible under applicable law and the requirements for providing reasonable accommodations to employees with a disability.

The restaurant industry continues to be operating under no small amount of pressure. At any time, maintaining the highest standards in how staff is treated is a hallmark of a well-managed organization. But the stakes are a lot higher during a time when finding and keeping good people is a top operational challenge.

Kimberly Gore is the National Practice Leader of HUB International’s Hospitality Specialty Practice. She has over 30 years’ experience in the insurance industry with a specialization in hospitality and tourism clients. Kim is responsible for a strategic approach to carrier relationships, specialization and best in class service to benefit each client. Kim is an active member of the insurance community serving as president of IIABHGC and as a board member for IIABSC and was awarded the South Carolina Young Agent of the year in 2010. 

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