H&R Block Employees Say No Poach Agreement Hindered Wages, Mobility

A woman has filed a lawsuit alleging H&R Block employees have had their wages and upward mobility limited for years by a no poach agreement.

Plaintiff Janice D. says she worked as a seasonal tax preparer for H&R Block in Florida during the 2012-2013 tax seasons. She alleges her financial compensation was artificially suppressed because of the no poach agreement.

H&R Block has more than 6,500 locations owned by its corporate office. Thousands of other locations are franchises. Janice’s lawsuit alleges all of the stores have participated in “anticompetitive conduct” by honoring the agreement not to hire company employees from each other.

H&R Block Employees Suffer from No Poach Agreement

Because H&R Block locations cannot compete with each other over the labor pool, the H&R Block employees lawsuit alleges the no poach agreement restricts competition for employees in the tax preparation market and artificially suppresses wages among competing firms in the highly specialized field.

In her complaint, Janice alleges the enforcement of the no poach agreement starts with the recruiting and hiring process. She says the first question on the H&R Block online application for positions through its corporate tax office asks, “Have you ever worked for H&R Block or a H&R Block Franchise affiliate?”

Anyone who answers yes to that question is prompted to enter their H&R Block employee ID number, she says. The prospective employer can flag applicants who are or who have been employed at competing franchisees or corporate-owned stores.

“The purpose and effect of this provision is to enforce and perpetuate the conspiracy, in particular, by identifying and preventing violations of the agreement,” says the H&R Block employees lawsuit.

Because tax preparation is largely seasonal, corporate and franchisees need to recruit a high number of new or returning employees annually. Janice says H&R Block’s disclosure to the Securities and Exchange Commission states that the business’s viability is dependent upon finding enough employees, including tax professionals, to hire and train for that seasonal period.

According to the H&R Block employees lawsuit, the company suppressed healthy competition among the tax preparation locations, which also suppressed wages, benefits, compensation and other expectations of employment.

H&R Block demands that potential employees complete a 60-hour company-specific educational course before being considered for employment unless the prospective employee can pass a test that proves equivalent knowledge. According to Janice’s lawsuit, these courses take “hundreds of dollars and dozens of hours to complete” and “completing those requirements provides no guarantee of employment.”

When they complete the course, Janice says, the students obtain an H&R Block certification that is required to become a tax preparer at their locations.

Because the H&R Block employees receive specific instruction through corporate-directed trainings, Janice argues the tax preparers would expect to be allowed to move from one location to another relatively easily.

But she argues that because of the no poach agreement, the H&R Block employees lawsuit alleges than almost 70 percent of the 70,000 tax professionals listed on the company’s website are affiliated with only one corporate-owned or franchised office.

The H&R Block Employees Lawsuit is Case No. 4:18-cv-01022-BCW in the U.S. District Court for the Western District of Missouri.

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