Beloved burrito-maker Chipotle Mexican Grill has found itself in a situation messier than the finger foods that brought the company more than $4 billion in revenue last year. A magistrate judge in Scott v. Chipotle Mexican Grill, Inc. recently ordered that a report prepared by a human resources consultant, Cinda Daggett, is not protected by the attorney-client privilege because she wasn’t an agent of the law firm Chipotle hired back in 2011 to assess whether its Apprentices and Assistant Managers should be paid overtime. The report, or “job function analysis,” examines the work lives of a handful of Apprentices to, in the words of a Chipotle compensation analyst, “get a really good understanding of what Apprentices do in their day-to-day jobs” and provide the law firm “information on the ground so that they could give us an opinion on what we were asking.”
The plaintiffs in Scott—and there are almost 600 of them—claim that the quick-service giant misclassified its Apprentices and Assistant Managers as exempt from federal and state overtime laws. So, if that report helps them show that Chipotle willfully violated wage-hour laws by failing to pay these employees overtime, it could mean mucho dinero for the plaintiffs.
But why wasn’t that report—which was addressed to the lawyers, not Chipotle—privileged? After all, while the applicable standard varies, courts across the country have found that the attorney-client privilege can apply to communications with a non-lawyer hired by a law firm, as long as the communication is made confidentially for the purpose of providing legal advice. Well, for starters, the law firm that received the report had already offered its opinion on whether the position was exempt from overtime laws. In fact, by the time the report came out, Chipotle had already hired a second firm for a second opinion—and had received that second opinion.
Moreover, the court felt that the report didn’t tell the lawyers anything essential to their legal analysis that they couldn’t figure out on their own. Daggett was not, for instance, interpreting complicated scientific concepts beyond the realm of the lawyers’ expertise so that the lawyers could turn around and provide legal advice. No, at the end of the day, she was explaining job duties to employment lawyers, and that’s something the lawyers could have learned through direct communications with the client. Plus, Chipotle couldn’t point to any evidence that Daggett was in fact hired to assist the lawyers in providing legal advice. When Chipotle told the Apprentices it had hired a consultant, it explained the consultant was coming to their stores to “study what it is that really good Apprentices do at our restaurants.” There was no indication that communications with the consultant were confidential or for the purposes of obtaining legal advice. So, the magistrate judge ruled in March, the Daggett report was not privileged.
Still hoping to keep the report under wraps, Chipotle objected to the magistrate judge’s order, then asked her for permission to file a motion for post-judgment relief. After accepting short statements from both sides, the judge let Chipotle know that she wasn’t going to change her mind based on the additional information Chipotle provided. First, “newly discovered” emails Chipotle found between Daggett and the lawyer served only to show that Daggett was not sure whether her report was supposed to go to the attorney or straight to Chipotle. In other words, even Daggett was not certain she was hired to assist with providing legal advice. Similarly, the unsigned, undated confidentiality agreement Chipotle apparently sent to Daggett only underscored that she was working directly for the company, not its lawyers. After the court’s most recent ruling, it seems Chipotle will be forced to spill the refried beans about Daggett’s findings.
With the Department of Labor poised to issue new regulations on the Fair Labor Standards Act’s white-collar exemptions, proactive employers across the country, like Chipotle, soon will take a long, hard look at whether employees previously classified as exempt still qualify under the new rules. But if they hope to keep those reviews privileged, they’ll learn from Chipotle’s example and hire a lawyer, not a consultant.