Tim Hortons Class Action Alleges No-Hire Clause

A recent Tim Hortons class action claims that the doughnut and coffee shop traps its Canadian employees with anti-competitive agreements.

Plaintiff Samir Latifi reportedly worked at a Tim Hortons in British Columbia between May and September of 2012. As a baker, he says he worked the “graveyard” shift between 1 a.m. and 7 a.m.

Latifi claims that The TDL Group Corp., the organization which owns Tim Hortons restaurants in Canada, caused him and other employees to suffer reduced wages and other harm due to anti-competitive clauses in employment agreements.

Anti-competitive agreements, sometimes referred to as “no hire” clauses or “no poach” clauses, make it so that franchisees cannot solicit or hire employees from other franchises.

According to Latifi’s recent Tim Hortons class action, employment contracts for the company force franchisees to agree “not to employ or seek to employ any person who is at the time employed by the Licensor [TDL] or by any other licensee of the Licensor [franchisees] operating the same or similar business, or otherwise directly or indirectly to induce such person to leave his or her employment thereat without the prior written consent of the Licensor.”

As a result of these agreements, employees like Latifi are allegedly denied the opportunity to seek competitive wages or upward mobility at other Tim Hortons locations. This reportedly means that franchises can keep a firm grip on their “best employees” without having to provide competitive wages and benefits in order to get them to stay.

“As a direct result of TDL’s actions, the plaintiff and Class Members have suffered reduced wages, reduced employment benefits, loss of professional growth opportunities, and worsened working conditions because of the express unlawful agreement among TDL and its franchisees in the No-Hire Clause,” the Tim Hortons class action claims.

Anti-competitive agreements are generally considered to be harmful to employees because it rids them of the leverage they need to demand competitive benefits. When franchises are allowed to hire from each other, employees are reportedly more likely to receive better pay and increasingly beneficial employment packages as franchises fight to poach or keep the best workers.

Latifi argues that Tim Hortons’ anti-competitive agreements are particularly harmful for low wage workers.

“The No-Hire Clause significantly restricts employment opportunities for low-wage workers at all Tim Hortons restaurants, including those who have not sought employment with a competitor restaurant and those who have not been contacted by a competitor restaurant,” Latifi argues in his Tim Hortons class action. “Such an unlawful restriction causes a broad effect on all Tim Hortons employees of TDL and its franchisees.”

Latifi urges the court to follow the lead of the U.S. Department of Justice by enforcing legal action against no-hire agreements made between companies. According to the Tim Hortons class action, doing away with these agreements would benefit employees such as himself.

Are you a current or former Tim Hortons employee who had a “no hire” agreement written into your employment contract? Share your experiences in the comment section below.

Latifi and the proposed Class are represented by David A. Klein of Klein Lawyers LLP.

The Tim Hortons Class Action Lawsuit is Latifi v. The TDL Group Corp., Case No. VLC-S-S-198150, in the Supreme Court of British Columbia.

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