Chipotle Mexican Grill implemented a Shoes For Crews program in which employees were permitted to buy shoes directly from Shoes For Crews or through a payroll deduction. This is considered a safety program or good safety practice by workers’ compensation carriers. Based on its employees wearing SFC shoes, Chipotle obtained a reduction in its workers’ compensation premiums. Shoes For Crews also extended warranties to Chipotle to cover certain medical expenses in slip and fall related workers’ compensation cases. At one point, Shoes For Crews paid $25,000 to offset the cost of medical bills arising from injuries sustained by Chipotle employees.
Ashante Lewings filed a class action against her employer claiming this program violated a statute which prohibits employers from receiving a contribution from an employee, directly or indirectly, to cover any part of the cost of workers’ compensation.
Chipotle demurred arguing that labor code sections 3751 and 3752 do not prohibit safe workplace programs that are voluntary, nor do they prohibit third party warranty reimbursements. The trial court sustained the demurrer without leave to amend and the class action was dismissed. The court of appeal reversed in the unpublished case of Lewings v. Chipotle Mexican Grill, Inc.
The primary issue is whether Chipotle violated Labor Code section 3751, a statute which prohibits employers from receiving a contribution from an employee, directly or indirectly, to cover any part of the cost of workers’ compensation. The court noted that “Any time Chipotle is self-insured, the warranties directly cover the cost of compensation by paying medical expenses. Any time Chipotle has workers’ compensation insurance, the warranties indirectly cover the cost of compensation by defraying increases in insurance premiums and replacing lost dividends.”
When the employees purchased SFC shoes, they indirectly contributed to the cost of compensation because their purchases resulted in Chipotle receiving warranties from Shoes For Crews designed to offset workers’ compensation medical expenses.