Taco Bell Settles Class-Action Suit Over Pay Abuses


Taco Bell Corp. said Thursday that it has agreed to let thousands of current and former workers in Washington state file claims to recover back pay for unrecorded work hours, unpaid overtime and other alleged wage and hour violations.

The agreement, subject to court approval, settles a class-action lawsuit filed against the restaurant chain on behalf of up to 16,000 workers employed from February 1992 through last March. Lawyers for the workers said the claims could total $10 million.

The class-action suit was filed in Washington state on behalf of nonsalaried employees at 62 company-owned restaurants. A Seattle jury last April found Taco Bell liable for a statewide pattern of wage and hour abuses. A trial was to have begun next month to determine the amount to be awarded.


Taco Bell, which admitted no wrongdoing, also agreed to pay for plaintiffs’ legal fees, a neutral claims-processing office and a toll-free information phone line for employees with questions about claims.

“There are areas that a lot of these workers may be unaware of,” said David N. Mark, an attorney for the workers. For example, he said, employees should have been paid for lunch breaks if they were on call to resume work at any time.

Claims are expected to range from $20 to “$25,000 to $50,000,” Mark said. The higher amounts “would be for shift managers running stores, getting paid for 40 hours and working 60 or 80,” he said.

Taco Bell can challenge claims but must pay for binding arbitration. If a claim is upheld in arbitration, the company must pay the full amount plus a 30% penalty and the plaintiffs’ arbitration legal fees.

The Irvine-based restaurant chain, which specializes in Mexican-style fast food, maintains that its policy has always been to pay for all work performed.

“Anyone abusing that policy will be fired,” corporate spokesman Peter Stack said Thursday. He noted that Taco Bell has held training sessions in state law for managers in Washington and has set up nationwide toll-free lines for employees to report wage problems.


Trying to defuse a similar pending lawsuit in Oregon state, Taco Bell has sent letters to thousands of current and former workers inviting them to file claims if they believe they have been shortchanged.

A judge will decide whether those efforts merit dismissing that lawsuit. Mark called the company’s efforts in Oregon inadequate to correct the problems there.

Taco Bell also faces an overtime lawsuit involving more than 2,400 salaried employees at company-owned restaurants in California. The suit, filed last year in Santa Clara County Superior Court, contends that general managers and assistant general managers were eligible for overtime pay because most of their duties were routine, not supervisory.

Similar lawsuits have been filed against other well-known U.S. companies, especially retailers, accusing them of trying to increase profits by misclassifying workers in an effort to avoid paying them overtime.

Shares in Taco Bell’s parent company, Tricon Global Restaurants, rose by 13 cents to close at $34.81 on the New York Stock Exchange.

Tricon, spun off from Pepsico Inc., also includes the Kentucky Fried Chicken and Pizza Hut chains. Pizza Hut has been the target of a lawsuit in South Carolina alleging that managers, under heavy corporate pressure to cut costs, cheated workers out of pay.