Chipotle is a popular Mexican restaurant which serves millions of customers in its 1150 restaurants around the country. Even in the downturned economy, Chipotle still held strong. Price increases didn't ward off buyers, and the company saw an 11 percent profit increase in 2011. The company's stocks rose 40 percent over the past year as well. Despite the delicious burritos and mouth-watering guacamole, there are some things about Chipotle that just don't taste right to the US government. According to The Wall Street Journal, Chipotle Mexican Grill is being subpoenaed by the Securities and Exchange Commission (SEC) because of its methods for hiring workers.

The government has made it very clear that employees should not hire illegal immigrants, and they are concerned that Chipotle has not been honoring these rules. The SEC notified Chipotle of their investigation on Thursday, May 17^th 2012, and told that they are suspected of hiring undocumented workers at some of their locations. In a regulatory filing on Friday, the company disclosed that the SEC has asked for information regarding their hiring practices and authorization requirements. They will need to provide public statements and other disclosures concerning how they hire their employees and determine whether or not they are documented workers.

The SEC followed audits by the U.S. Immigration and Customs Enforcement. Apparently, the ICE performed a first investigation in 2010. Chipotle was forced to fire approximately 450 of their employees in Minnesota. After the Minnesota employees were fired, the ICE did another US Attorneys Office probe in 2011. The government has scrutinized operations in Washington D.C., Virginia, Los Angeles, and Atlanta in addition to the Minnesota inspection. Chipotle is a unique situation when it comes to these allegations. The company owns all of their restaurants, rather than selling them as franchises like many other fast food restaurants do. Because of this, they will take a direct, frontal hit, if they are convicted of illegal hiring strategies.

Chipotle fully intends to comply with the SEC on this issue. After the audits by the ICE, Chipotle agreed to install the E-Verify program into their hiring methods to avoid another problem. This system created by the US Department of Homeland Security checks all potential hires to make sure that they are legal citizens of the United States before they can be granted a job. One of Chipotle's main attorneys says that he has no doubt the company will be found free of error if further investigations are done.

Yet other onlookers are concerned. Why is the Securities and Exchange Commission getting involved in Chipotle's hiring practices so late in the game? These skeptics believe that there may be something askew in the company. Maybe they have not been using E-Verify before hiring employees, or maybe they have been consciously hiring undocumented workers. Many times the company will prefer Latino workers because of their familiarity with the Mexican cuisine and their ability to prepare it authentically.

When Chipotle was forced to terminate their Minnesota employees, they admit that they saw a lot of consequences. It is too difficult to fire such a large amount of people in a short amount of time, they confessed. They had to increase labor costs so that they would have people available to train the onslaught of new employees that they had to hire almost immediately. If the investigations continue to expand, then Chipotle worries that it will be paying out much of their profit to legal fees. However, they say that they are not worried about headline risk at this stage, and believe that they have followed protocol.