MINNEAPOLIS/WASHINGTON (Reuters) - The hundreds of illegal immigrants recently fired from fast-growing burrito chain Chipotle Mexican Grill Inc had a pretty good run when it came to job security.
Not only did some get jobs with fake Social Security numbers and few questions about their immigration status, in some cases they actually told managers point-blank their papers were no good. And they often stayed on for years.
Marta, an undocumented worker from Mexico, twice used false Social Security numbers to secure positions at the chain now being audited by U.S. Immigration and Customs Enforcement.
She was hired with one false Social Security number in 2003 and rehired as a new employee a few years later under a different name with new, but still fake, number.
The second hire, in 2006, came after Marta told her bosses she needed to change her Social Security number because it belonged to someone else and had caused her mortgage application to fail.
"I thank them (for rehiring me) because I was about to lose my job," said Marta, who was finally fired last winter for false documents along with about 450 more of Chipotle's 1,200 Minnesota workers. She asked that her full name not be used for fear of deportation.
Now facing more audits in Washington D.C. and Virgina, Chipotle has become the best-known company in the sights of ICE. Its audit-related firings, including dozens in Washington, are no minor staffing issue.
The 26,500-strong company says it takes the audits, the outcomes and the law very seriously. But Reuters has interviewed eight former employees, most of whom speak fondly of their time at the company, who say Chipotle's management ignored signs that called workers' immigration status into question.
The Denver-based company's woes underscore the challenges employers face with a broken U.S. immigration system. Penalties for non-compliance are paltry and many employers are unable or unwilling to make the effort to ferret out undocumented workers, for whom low-wage jobs are a ticket to a better life.
Analysts want to know how deep the problem runs at Chipotle because massive turnover could raise its labor costs and may threaten its stellar stock.
Chipotle defends its hiring practices and said in an email statement: "We never knowingly hire any employee that is not legally eligible to work in this country and, if we receive any credible information questioning the status of an employee, we look into that and take appropriate action."
The company known for its motto "Food With Integrity" is more exposed than other chains because it owns all of its 1,100 U.S. eateries, instead of selling outlets to franchisees as many rivals do. It won't say how many workers it has fired outside Minnesota due to the audits, or whether the hiring of undocumented workers has been limited to audit markets.
It isn't hard to find an illegal immigrant working in a U.S. restaurant: estimates of the percentage of illegal workers in the food service industry range from around 10 to as much as 40.
While many chains rely on them, Chipotle was the highest profile company caught when immigration enforcement strategy switched to cracking down on employers rather than workers in 2009.
The company said it believes its troubles in Minnesota are largely behind it. But a bizarre incident from Washington suggests it is struggling to stabilize the situation there. In March, workers in the chain's Columbia Heights restaurant were called to the back of the restaurant for a meeting, while new workers took their places up front.
Miguel Bravo, a 29-year-old from El Salvador, was fired that day and he says Chipotle has dismissed about 70 workers in the capital, where the chain has eight restaurants.
"They don't have a modern system to verify documents ... They didn't confront me at any moment, or ask me if my papers were good or if I was authorized to work legally in the United States," said Bravo, who joined Chipotle in 2009 -- the year the company's annual report disclosed it had "been subject to audits by immigration authorities from time to time."
A former supervisor who asked to be called Ramirez, a surname, was hired in 2006 -- after Chipotle's own computer system kicked back the first Social Security number he presented because a different employee already had used it. He bought a new Social Security card and used it to get a job.
Given the terminations in Minnesota and Washington, Reuters asked the company why it has not yet adopted E-Verify, the verification system recommended but not required by ICE, in all of its markets. The company did not respond to the question.
One answer the fired workers and union leaders offer is that hiring illegal immigrants was good for business because it lowered labor costs.
"They know we're hard workers and that we are going to do the job the way they want, so they will keep it quiet," said Jose, 45, an undocumented Minnesota worker who was fired after nearly five years at Chipotle. He asked not to be identified because he has a job at another restaurant.
Chipotle's "business model depends on folks going in and being served food by Latinos ... This is why this problem goes to the core of their business," said Javier Morillo, president of labor union SEIU Local 26, which does not represent the fast-food sector but has helped the Minnesota Chipotle workers because of its interest in immigration reform.
Chipotle has impressed investors with its ability to hold down labor costs as sales soar. (Graphic of Chipotle's labor costs and sales: r.reuters.com/pyn88r)
Stock in the company, which debuted at $22 in January 2006, recently hit an all-time high of $282. That's despite warnings that labor costs will take a hit from the audits.
From 2006 to 2010, average labor costs per restaurant rose just 1.8 percent to $444,244, while average sales at restaurants open at least one year rose 14.2 percent to $1.8 million, based on data from Chipotle financial filings.
Chipotle has attributed its market-leading labor efficiency to smart staffing and a talent development program that allows crew members to work their way up to management while also lowering turnover and training costs.
The fired workers see it differently.
Alejandro Juarez said that in his five years working at Chipotle outlets around Minneapolis he always heard the phrase "mas rapido, mas rapido" -- Spanish for "faster, faster." He was fired in December as part of the immigration sweep.
There seems to have been some attempts in the company to tighten hiring practices in recent years.
One former assistant manager in Minnesota, who is a U.S. citizen and asked not to be named because he is looking for a different job, said he was trained to inspect documents and fill out I-9 forms -- the paperwork companies use to show that their employees are authorized to work in the United States.
In early 2009, his restaurant got a handbook, known as a "red book", and a black light that can help spot fake documents. About a month later, he said, an area manager asked that the black lights be returned. No explanation was given.
"We had this training, and we were supposed to use the black light ... It raises questions in your mind," said the worker who was fired for not meeting goals in December 2009.
A fast-tracked illegal employee who asked to be identified as Benitez, a surname, said the "red book" was the only remnant of the I-9 training when he turned up to manage a store outside Minneapolis in 2010.
Chipotle did not comment on the details of those accounts.
"It is very difficult to differentiate between documents that are genuine and those that are not, as many forgeries are very difficult to detect," Chipotle said instead.
"It is also important to note that employers cannot bring a higher level of scrutiny to a potential employee or group of employees without risking claims of discrimination," it added.
Compliance experts say employers can avoid discrimination lawsuits by checking the validity of every worker's papers.
All six of the fired Minnesota workers Reuters interviewed were using Social Security numbers that did not match their names and birth dates. Chipotle could have found anomalies had it used E-Verify.
Now, help might be on the way. Chipotle has placed job listings for an I-9 specialist and compliance consultants.
The ideal I-9 Specialist candidate, according to the listing, will: "Simultaneously ensure our immigration compliance and advance Chipotle's unique people culture." (Additional reporting by Martha Sanchez-Avila; Editing by Kieran Murray)