Slip-and-fall lawsuits and similar legal cases are a constant concern for Chipotle Mexican Grill Inc., which manages more than 3,000 restaurants with almost 100,000 employees.
The Newport Beach-based company, valued around $43 billion (NYSE: CMG), says it must follow a wide variety of regulations in every state it operates.
“We are involved in various claims and legal actions, such as wage and hour, wrongful termination and other employment-related claims, slip and fall and other personal injury claims, advertising and consumer claims, and lease and other commercial disputes, that arise in the ordinary course of business, some of which may be covered by insurance,” the company’s 2021 annual report said.
For example, the New York City Department of Consumer and Worker Protection in 2019 alleged violations at five Chipotle restaurants of New York City’s Fair Work Week law and Earned Safe and Sick Time Act between November 2017 and September 2019.
Last April, the department amended the complaint to cover purported violations at substantially all Chipotle restaurants in New York City.
Chipotle and the city department are in ongoing mediations. It doesn’t expect any additional losses above the amount accrued in its financial statements.
“However, if there is a significant increase in the number of these claims, or if we incur greater liabilities than we currently anticipate under one or more claims, it could materially and adversely affect our business, financial condition, results of operations and cash flows.”
By Dec. 31, it’s accrued a legal liability balance of $48.1 million, down from $51.2 million in the prior year.
The company’s biggest reported legal cost of late was in 2020, when it reportedly agreed to pay $25 million to resolve charges accusing it of serving tainted food from 2015 to 2018, prior to the arrival of current CEO Brian Niccol.
