Why Preventative Employment Policies are Important – The case of Chipotle Mexican Grill

Nicholas Fortuna, February 29, 2016

Chipotle was sued by seven former female managers for discrimination. They alleged that Chipotle favored male mangers and that was the reason they were fired. Chipotle countered that the managers were fired for inadequate performance. The claims of two plaintiffs were dismissed on summary judgment but the court ordered trial on the remaining five plaintiffs’ claims. The court’s ruling in Chipotle case is instructive in that changes to human resource practices would have allowed the employer to avoid liability for the alleged discrimination claims.

Like many employment discrimination cases, the claims filed against Chipotle were based on circumstantial evidence. There was no direct evidence of discrimination. The policies in place were not themselves discriminatory. The nature of the claims filed against Chipotle were built on an accumulation of circumstances that alone, have nondiscriminatory explanations. On motions for summary judgment, the court ruled that two of the plaintiffs did not have a claim and ordered the claims of the remaining five plaintiffs to trial. The court denied Chipotle summary judgment as to the five plaintiffs because it found that the inconsistent manner by which Chipotle handled the review process and termination of five of them was enough to require a trial on the claims of discrimination.

Evidence of unexplained contradictory employee reviews was one of the main reasons Chipotle lost on summary judgment. An example of such a contradictory employee review is when an employee was promoted to a new position and got an early review that she is doing well, but subsequently got a poor performance review without any documentation or explanation about the change in performance.  The earlier positive review showed that employee was handling the initial parts of the new position well.  However, expectations were that the employee would be able to take on more responsibility as she grew into the job with more time and experience. The employee fell short of those expectations, resulting in a subsequent poor review.  The poor reviews should have taken into account the prior good reviews and addressed the change in performance and rating. The absence of such information gives rise to the appearance that nothing has changed other than the employer’s attitude toward the employee. Variations on this example is what Chipotle faced with the five plaintiffs whose claims were ordered to trial.

So far, three of the plaintiffs’ claims went to trial and the jury found for them. The outcome in Chipotle illustrates that in cases based on circumstantial evidence a jury could infer that policies were applied differently to men than women even though there was no motivation to discriminate. Sloppy and inconsistent documentation of performance can be held against the employer. Proper procedures and policies, if followed, will minimize the risk of such outcomes.

When terminating an employee, employers should not spare employees’ feelings by being vague. Account for what has changed since receiving good reviews and why the employee’s performance is inadequate. Also, the reasons given to the employee should be the same ones used internally to justify the termination. Inconsistent statements about why an employee was terminated creates opportunities for claims of discrimination to be made.

The employer should be vigilant and consistent in how it handles employee deviations from acceptable performance. If the employer has a three strikes policy, stick to it. If there is a performance improvement plan utilized by the company, use it. Treating variances in performance from one employee to another differently may be used as circumstantial evidence of discriminatory treatment.

Equally important, is documenting employee performance and evaluations. Employers should implement mechanisms for regularly evaluating employee performance using objective criteria. Employers should be careful to only evaluate what is in the employee’s control to fairly document performance. Unfair performance reviews will appear as excuses for unequal treatment.

Before taking any action to terminate an employee, the employer should review that employee’s file for inconsistencies and address them, otherwise the employer may be creating evidence in support of a possible claim. For instance, if an employee received mixed signals about his or her performance, termination should be delayed until a clear record is created.