Fast-Food Workers May See Wages Rise with Removal of No Poach Clause

Seven fast-food chains have agreed to stop placing a no poach clause in franchise agreements, announced Washington State Attorney General Bob Ferguson, who had begun investigating the companies because of the practice.

A September 2017 New York Times article shed light on no poach agreements added to the franchise agreements between the franchise and the fast-food company headquarters. Few workers would know that their jobs, and likely their wages, were locked in at the location where they were hired because only the franchisee and corporate would see these agreements.

A no poach agreement would prevent an employee to move from one franchise to another within the same company. For instance, a fry cook at a McDonald’s in one location would not be offered employment by another McDonald’s franchise for higher pay.

Economists blame such no poach agreements for decreasing competition among workers, reducing opportunities for low-wage employees and stagnating wages within the fast-food industry, all alleged violations of the antitrust provisions in Washington state’s Consumer Protection Act.

Employees who are not allowed to move from one franchise location to another may suffer financially because their current location will have little incentive to offer raises. Such circumstances hurt workers all over the nation.

According to a press release from AG Ferguson’s office, “Ferguson negotiated legally binding agreements, known as assurances of discontinuance, whereby these corporations would agree to end these restrictions on workers nationwide in order to avoid a lawsuit from the Washington State Attorney General’s Office.”

McDonald’s previously announced that none of its franchises would continue enforcing the no poach clause of their contracts. McDonald’s said it would no longer add no poach language in contracts with newly created franchises and that it would notify all of its locations that any current no poach clause should not be honored. McDonald’s promise is now a legally binding agreement because of Ferguson’s assurance of discontinuance. McDonald’s has 60 days to remove no poach clauses from franchise contractions with Washington state.

These companies agreed to stop placing no poach language in their new contracts and to remove no poach clauses in all current franchise agreements nationwide:

• Arby’s (3,283 locations nationwide)
• Auntie Anne’s (1,229 locations nationwide)
• Buffalo Wild Wings (1,214 locations nationwide)
• Carl’s Jr. (1,168 locations nationwide)
• Cinnabon (836 locations nationwide)
• Jimmy John’s (2,774 locations nationwide)
• McDonald’s (16,193 locations nationwide)

According to the assurance of discontinuance, Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carl’s Jr., Cinnabon and Jimmy John’s have 120 days to remove the no poach clause from current agreements within Washington state. All other states, Puerto Rico and Washington D.C. have to update existing franchise agreements when the contracts are due for renewal.

“Companies must compete for workers just like they compete for customers,” said Ferguson. “They cannot manipulate the market to keep wages low. My goal is to unrig a system that suppresses wages in the fast food industry.”

Ferguson continues to investigate other corporations that include no poach language in their franchise contracts. He expressed he is prepared to file lawsuits if other companies do not remove their no poach provisions.

Join a Free Fast Food Employee Poaching Class Action Lawsuit Investigation

If you work for Arby’s, Burger King, Jimmy John’s, Papa John’s, Pizza Hut or Domino’s and were prevented from moving to a different franchise that is part of the same company, you may have been the victim of a no-poach agreement. If so, you may qualify to participate in this employee poaching class action lawsuit investigation.

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