H&R Block No Poaching Agreement Limits Career Mobility, Employees Claim

A no poaching agreement among H&R Block franchises has artificially suppressed wages, claims an employee who has filed a proposed class action lawsuit against the tax preparation company.

Plaintiff Carmen M. says she worked as a tax preparer for H&R Block. She says that beginning in at least January 2009 through at least May 2018, the company allegedly suppressed wages and limited employees’ mobility by making franchised locations sign an anti-competitive contract.

According to the no poaching agreement lawsuit, one-third of H&R Block offices are franchise locations, and nearly 6,700 are owned by corporate.

Carmen says the clause in question is in the franchise agreement under the heading “Restrictions on Competition,” which says that “During the term of this Agreement, neither Franchisee nor any of Franchisee’s Associates will, without H&R Block’s prior consent… Solicit for employment any person who is employed by H&R Block or any other franchisee of H&R Block.”

Plaintiff: No Poaching Agreement is Illegal

No poaching agreements may violate antitrust laws that allow employees to compete for wages by applying for positions at other locations. Other companies that have faced similar antitrust litigation over no poaching agreements include Samsung and DreamWorks.

Carmen argues that If an H&R Block franchise is guaranteed that an employee will not be hired by another H&R Block location, the franchisee has little or no incentive to offer better benefits, increased pay or a promotion to H&R Block manager.

An employee who applies for an H&R Block manager position at another franchise may not even receive an interview due to the no poaching clause. The restrictions prohibit the franchise from recruiting employees from other H&R Block locations and from hiring employees who actively try to leave their current H&R Block locations.

The purported average pay of a tax preparer at H&R Block is $10.86 per hour, well below the $22.76 average hourly rate published by the Bureau of Labor Statistics. Meanwhile, H&R Block reported total revenue of $3.2 billion in 2017.

Each H&R Block manager and employee is required to meet the same training requirements. According to Carmen’s lawsuit, the no poaching agreement does not save the company any money on training employees. She argues the restrictions on recruiting employees from other franchisees only serves the alleged purpose of restricting competition for employees in the tax preparation field “and artificially suppressing wages among competing firms in a highly specialized sector.”

Because tax preparation is a seasonal business, the company and its franchisees recruit a large number of new or returning employees every year. Many of the employees work for H&R Block for several months a year until needed the following year.

H&R Block has stated that recruitment at the height of tax season is extremely competitive. By adding the no poaching agreement to the franchise paperwork, Carmen claims, the company helps its own corporate locations and its franchisees retain the ability to hire the same personnel every year.

Even if the employee wishes to be employed by a different H&R Block office, Carmen says the employee is tracked because the online job application asks whether or not the employee has previously worked for the company and if so, asks the employee to enter his/her employee ID number. She argues that the employee can’t escape the history of working for that initial location and most likely, will be locked in to working at the location due to the illegal no poaching agreement.

The No Poaching Agreement Lawsuit is Case No. 1:18-cv-07435 in the U.S. District Court for the Northern District of Illinois.

Join a Free H&R Block Employee Class Action Lawsuit Investigation

If you were an H&R Block employee at any time between 2009 and May 2018 and were prevented from obtaining employment at another H&R Block franchise, you may qualify to file an H&R Block class action lawsuit.

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