Shares of Chipotle Mexican Grill dropped about 2 percent yesterday, after the company announced that federal prosecutors are investigating the company's compliance with immigration laws in its hiring practices.
Last Friday, the Securities and Exchange Commission issued a subpoena to the Denver-based company.
In an SEC filing yesterday, Chipotle reported that the U.S. attorney's office was conducting an investigation over potential criminal securities law violations, and that they "intend to continue to fully cooperate in the government's investigations."
The company has come under fire in the past for related allegations. In 2010 and 2011, it fired hundreds of workers from chain locations in Minnesota, Virginia and Washington, D.C. after audits by the Department of Homeland Security found they were undocumented.
Last week, my interview with the CEO of Chipotle, Steve Ells, aired on Marketplace Morning Report. During the interview, I asked him about the issues his company had in the past related to immigration law and hiring practices, and this is what he had to say:
Jeremy Hobson: You got into some trouble a year ago for employing some illegal immigrants. Now you have more than 25,000 employees in your restaurants all around the country.
Steve Ells: I think 35,000 approximately now.
Hobson: More than 35,000. How do you make sure that they are legal workers?
Ells: Well, you know, we’ve always followed the letter of the law when hiring and actually go beyond what was required – double-checking our documentation. Unfortunately the system is not perfect, and we found ourselves in this situation where we were being audited and some undocumented workers were found at Chipotle. That was an unfortunate situation.
Since then we have started using what’s called E-Verify, which is an extra level above and beyond. That’s not required, but that we’re participating in to make sure we have workers with proper documentation. And recently we started rolling out a system called Toleo, which is an online system which allows us to enter information only once and make sure it’s accurate and then it populates the different fields for I-9’s and W-4’s and paperwork that we need in the office. So it’s a system that helps us ensure even more accuracy.
Hobson: And it’s obviously not just Chipotle. Do you think there is any way to ensure that all workers are legal in the end, or will there always be some that are getting through the cracks there?
Ells: Well its tough to answer that. Whatever systems you have for anything really, there are always going to be people who try to game the system, or do something to break the system. But I think that we are going above and beyond right now in two significant ways to ensure that we are complying with the immigration.