Jimmy John’s, Other Chains Give Up Agreement Not to Hire Employees Between Franchisees

Several new companies have followed the lead of restaurants like Jimmy John’s, agreeing to remove any contract clauses that are part of an agreement not to hire employees from other franchisees.

In July, numerous companies announced that they had negotiated with Washington State Attorney General Bob Ferguson to remove any worker contract clauses which enforce an agreement not to hire employees from other franchisees within the same chain.

Companies including McDonald’s, Arby’s, Carl’s Jr., Jimmy John’s, and Auntie Annie’s agreed to do away with this practice to avoid potential lawsuits over violations of antitrust provisions in Washington’s Consumer Protection Act.

Recently, other companies have followed this example and similarly removed no-poaching clauses. On Aug. 22, Ferguson announced that Panera Bread, Sonic, Applebee’s, Little Caesars, IHOP, Five Guys, Jamba Juice, and Church’s Chicken have agreed to drop the harmful clauses form their worker contract terms.

Within 90 to 120 days, these companies will stop requiring franchisees to submit to an agreement not to hire employees from other franchisees. Although Ferguson’s deal only applies to Washington state, the chains have agreed to stop adding the harmful agreements in their over 15,000 locations nationwide.

“Businesses can’t rig the system to avoid competition,” Ferguson argued in a statement.

Although Ferguson’s jurisdiction lies in Washington, he says he isn’t done investigating potential infractions of anti-trust laws. “My goal is to eliminate no-poach clauses in the fast-food industry nationwide,” Ferguson said in a statement.

An agreement not to hire employees from competing chains often does not appear in individual worker contracts, instead hiding in the clauses of a restaurant chain’s franchise contract. As such, workers are not aware of the potentially damaging scheme that many chains enforce.

No-poaching clauses can be extremely damaging for employees and industry wage conditions. When companies enter into an agreement not to hire employees from competing stores, their employees are unable to look for competitive wages and positions at other stores. This forces employees to stay in positions where their wages and benefits may not be competitive.

Fast food chains may claim that an agreement not to hire employees form competing chains is simply a protection on the time and money invested into training workers, but experts disagree.

Economists theorize that no-poaching clauses may contribute to the stagnating wages in the fast food market in addition to harming free market competition. “I think it’s very hard to come up with a sound business justification for this practice, other than reducing competition for workers,” said Princeton University economist Alan Krueger.

Although the actions of regulators and government officials such as Ferguson can provide relief for employees damaged by no-poaching clauses, individuals may also be able to take action.

If you worked for a fast food company such as Jimmy John’s, and were prevented from taking another job due to a no-poaching clause in your contract, you may be eligible to file a fast food no-poaching lawsuit or class action lawsuit against your employer.

A fast food no poaching lawsuit could help recover punitive damages and other compensation.

Join a Free Fast Food Employee Poaching Class Action Lawsuit Investigation

If you work for McDonald’s, Jimmy John’s, Pizza Hut, Little Caesars, Papa John’s, Domino’s, Burger King or Arby’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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