Chipotle illegally denied raises to unionized workers, watchdog says

A union's claims that Chipotle Mexican Grill violated federal labor law by withholding raises from workers who unionized have merit, U.S. labor board prosecutors have determined.

The quick-service restaurant chain will face a formal complaint by the National Labor Relations Board's general counsel unless it settles the allegations by the International Brotherhood of Teamsters, according to the NLRB.

Chipotle is accused of violating federal labor law by telling employees in Lansing, Michigan, that the company could not give them raises granted other employees because they had unionized, and then illegally withheld the pay hike from them.

Workers at the Lansing store voted for union representation in July of 2022, making them the sole such shop among the burrito chain's thousands of U.S. stores to sign up for collective bargaining. The first contract is still being negotiated.

In a statement to CBS MoneyWatch, Chipotle said it has been "bargaining in good faith on the first union agreement at our Saginaw Highway restaurant," and planned to resume negotiations later this fall. The company also touted its benefits, but did not specifically address the allegations raised by the NLRB.

The NLRB in April 2023 reached a separate settlement with Chipotle in which it agreed to pay $240,000 to workers impacted by its decision to close an Augusta, Maine, restaurant because of unionization efforts.

The latest development could draw further scrutiny to Chipotle's labor practices and exiting CEO Brian Niccol , who is leaving the post to take the helm at Starbucks in September. The coffee shop chain has also been embroiled in legal tussles with the NLRB over unionization efforts at Starbucks.

Newport Beach, California-based Chipotle owns and runs more than 3,500 restaurants in the U.S., Canada, U.K., France, Germany and Kuwait. The company employs more than 120,000 people.