Shake Shack 2016 Annual Report Download - page 44

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Table of Contents
Item 3. Legal Proceedings
In November 2015, we met with a law firm representing two former Shake Shack managers who alleged that Shake Shack improperly classified its restaurant
managers as exempt. Although we have always believed that our managers are properly classified as exempt under both federal and state laws, and have always
intended to defend any such lawsuits vigorously, we agreed to mediate the matter. At the conclusion of the meeting, the parties entered into a Memorandum of
Understanding, and the Company agreed to create a fund of $0.8 million to settle the matter. In exchange, all participating managers (former and current),
including the two former managers, will release Shake Shack from all federal and/or state wage and hour claims that may exist through the settlement date. As part
of the settlement process, the law firm filed a Complaint on March 17, 2016 with the Supreme Court of the State of New York (the “Court”), and within the
coming weeks will file the final settlement agreement with the Court as well as a motion seeking the Court’s preliminary approval of the settlement. As of
December 30, 2015, we recognized a liability of $0.8 million for this matter and related expenses.
We are subject to various legal proceedings, claims and liabilities, such as employment-related claims and slip and fall cases, which arise in the ordinary course of
business and are generally covered by insurance. As of December 30, 2015, the amount of ultimate liability with respect to these matters was not material.
Item 4. Mine Safety Disclosures.
Not applicable.
Shake Shack Inc. Form 10-K | 42