U.S. immigration agents descended on Chipotle Mexican Grill restaurants on Tuesday, interviewing employees in about two dozen outlets in Los Angeles, Atlanta and other cities.
Roughly 500 undocumented workers have been fired as a result of U.S. Immigration and Customs Enforcement (ICE) audits of the popular burrito chain's hiring paperwork in Minnesota, Virginia and Washington, D.C.
Tuesday's ICE interviews were part of a related criminal investigation and could suggest that government interest is intensifying.
In addition to the cities mentioned above, ICE agents also interviewed workers in Minnesota and Washington, D.C., said Robert Luskin, Chipotle's outside counsel and a partner at Patton Boggs in Washington.
Luskin said ICE gave Chipotle enough advance notice of the interviews by plain-clothed agents that the company had the opportunity to send a note to employees telling them it wanted them to cooperate.
We've got nothing to hide, Luskin said. We're absolutely convinced that nobody did anything wrong.
Chipotle's co-chief executive, Monty Moran, said on April 20 that the criminal division of the U.S. Attorney's Office in Washington, D.C. was overseeing the investigation and had asked for documents related to the ICE audits.
That request came hours after a Reuters story quoting fired immigrant workers who said that Chipotle, one of the highest-profile employers to fall under the scrutiny of immigrations authorities, ignored signs that pointed to the illegal status of some of its workers.
Luskin said the company has not received any subpoenas related to the criminal probe and that it is cooperating with federal prosecutors.
Tuesday's action doesn't signal a broader or more serious or more substantial investigation, said Luskin, who added that he had no reason to expect that the investigation would be confined to audit areas.
ICE spokeswoman Cori Bassett said the agency does not comment on ongoing investigations.
U.S. immigration enforcement has shifted considerably in recent years. Notably, the Obama administration is cracking down on employers rather than illegal workers.
Carl Shusterman, a former prosecutor for ICE's predecessor agency, the U.S. Immigration and Naturalization Service, said interviews like the ones ICE conducted at Chipotle on Tuesday show how the administration is ratcheting up pressure.
He also acknowledged that advance notification of upcoming ICE interviews might scare off any undocumented workers.
I would imagine what happens is that the people who are illegal will never come to work again, said Shusterman, who now is in private practice in Los Angeles.
Denver-based Chipotle has won plaudits from Wall Street for its seemingly uncanny ability to hold down labor costs. That ability has been a major factor behind its six-fold increase in share price since late 2008. Chipotle shares fell 2.4 percent Tuesday to $260.40.
The immigration probe may inflate costs in the long run if it leads to more mass firings. That could be bad news for Chipotle, which like other restaurants, is grappling with rising prices for everything from beef to produce.
It is also a blow to the reputation of a restaurant chain that prides itself on serving Food with Integrity.
Should the investigations uncover widespread disregard of immigration laws, co-chief executives Steve Ells and Monty Moran could face criticism for allowing the practice to spread through the 1,100-unit U.S. operation.
Unlike many rivals that sell franchises, Chipotle owns and operates its restaurants and is ultimately responsible for hiring.
The U.S. fast-food industry historically has offered relatively low pay and paltry benefits to legal workers and, as a result, has struggled with high employee turnover.
Experts say restaurant owners are attracted to illegal laborers because they work hard, are loyal and will go the extra mile to hold down a job.
It is hard to know the extent of hiring of illegal immigrants in U.S. restaurants. But immigrants, both legal and illegal, account for about a quarter of workers in the restaurant and food services industry and their numbers have climbed in recent years.
Their share fell from 24.5 percent in March 2006 to 21.4 percent in March 2008 -- before and during the recession -- but then recovered to 23.6 percent in March 2009 and March 2010, according to an analysis of the government's Current Population Survey (CPS) data conducted for Reuters by the Migration Policy Institute, a nonpartisan think tank.
The overall number of immigrants employed in the sector climbed from just over 1.7 million in 2008 to 1.8 million in 2010, according to this data, even as native employment fell from 6.4 million to 5.9 million.
The Pew Hispanic Center, whose demographic and labor market work is highly regarded, estimated in a 2009 report that 12 percent of the workforce in food preparation and serving in 2008 was undocumented.
(Graphic of immigrant workers and Chipotle share performance: http://r.reuters.com/nuh87r)
(Editing by Steve Orlofsky and Matt Driskill)