On Wednesday, Carmen Alvarez sued her employer, Chipotle Mexican Grill Inc., because the company refused to pay her and her fellow employees time and half for overtime. She claimed an Obama-era rule required the company to pay its employees time and a half for work over 40 hours. Alvarez, 55, started working for Chipotle in 2013 and when the labor rule was implemented, the company paid her accordingly. However, after a Texas federal judge temporarily blocked the rule in 2016, Chipotle stopped paying its employees for overtime.
Alvarez Takes a Stand
The lawsuit, which was filed in the US District Court of New Jersey, alleges that the Obama-era rule still applies despite the Texas court’s injunction. Thus, the plaintiff claims that companies failing to pay their employees for overtime are in direct violation of federal law. According to federal labor laws, updated in 2016, those making under $47,476 (raised from $23,660) are eligible for overtime. When the government updated the threshold last year, 4.2 million workers became eligible for overtime pay.
For Alvarez, the suit isn’t just about her situation; it’s about the “millions of Americans [who] are working long hours and not getting paid the money to which they are entitled.”
Companies Take Advantage
The original injunction in Texas was the result of a lawsuit filed by 21 states and several business groups claiming that the labor rule was preventing companies from making a profit. In the original claim, the business groups estimated that the rule could cost companies millions of dollars in the first few years. This case is now being considered by the U.S. Court of Appeals for the Fifth Circuit, because of an appeal filed by the Labor department.
With the decision still pending, companies like Chipotle have capitalized on the legal ambiguity, deciding to ignore the federally mandated overtime. Alvarez argues in the suit that private companies must continue to follow the rule until it is formally rescinded. Until then, the Texas court’s injunction only applies to select state government employees, Alvarez claims.
Comments From Both Sides
Joseph Sellers, one of Alvarez’s lawyers, had this to say: “Chipotle is denying overtime pay to thousands of workers that live paycheck to paycheck and rely on their weekly income to make ends meet.” He went on to suggest that this is also true of other companies who, by using a court ruling that doesn’t apply to them, cheat their workers out of hard earned money.
Chris Arnold, a spokesperson from Chipotle, wouldn’t comment. He briefly said, “A lawsuit is nothing more than allegations, and the filling of a suit is in no way proof of any wrongdoing.”
Third Party Perspective
According to Peter Fox, an attorney working with the National Employment Law Project, companies that choose not to comply with the Labor Department’s rule are mistaken in their logic. The court injunction applies only to those involved in the original case, i.e. the Department of Labor. Therefore, the injunction does not prevent a private citizen from suing his or her employer under the overtime rule. “If a company consulted administrative lawyers, I think they would have said ‘we don’t have an order to set aside this rule.’ They still risk private lawsuits,” Fox said.
Moving forward, it is important to note the position of the current Labor Secretary, Alex Acosta. At a hearing before a House Appropriation subcommittee, Acosta made it clear that he thought doubling the threshold was a “shock to the system.” And considering the current regulatory environment, the future of labor regulation in this country is precarious. We’ll have to wait and see how the court decides in Alvarez’s suit. A victory in that suit could mean a victory for workers everywhere.