Attorneys General Go After Fast Food No-Poaching Agreements

A coalition of 11 state attorneys general (AGs) has launched an initiative to stop the practice of no-poaching agreements that prevent fast food workers from being hired by competing franchisees.

DOJ and AGs target fast food no-poach agreements

“Our goal through this action is to reduce barriers and empower workers to secure better-paying and higher-skill jobs,” explained Massachusetts Attorney General Maura Healey, who is spearheading the effort.

No-poach agreements occur when companies agree not to recruit or hire each other’s employees.

The group of state AGs sent a letter demanding copies of existing no-poach agreements by Aug. 6. Recipients of the letter include Arby’s, Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen, and Wendy’s.

It is estimated that 80 percent of fast food franchisers have such agreements, but the practice is not limited to the food industry. In April, the Department of Justice (DOJ) settled its lawsuit with two rail equipment manufacturers who had a no-poach agreement in place. The lawsuit argued that such agreements stifle worker advancement and restrict their earning potential.

In January, the DOJ issued a warning about no-poach contracts:

One important area which the [Antitrust] Division will continue to monitor closely is the employer-employee relationship and, in particular, what are sometimes called “employee no-poach” agreements.  Agreements between employers that eliminate competition for employees in the form of no-poach agreements are per se violations of the Sherman Act.

In October 2016, the Division issued guidance reminding the business community that no-poach agreements can be prosecuted as criminal violations.  For agreements that began after the date of that announcement, or that began before but continued after that announcement, the Division expects to pursue criminal charges.  As our Assistant Attorney General explained last week, the Division expects to initiate multiple no-poach enforcement actions in the coming months.

The coalition includes attorneys general from California, District of Columbia, Illinois, Massachusetts, Maryland, Minnesota, New Jersey, New York, Oregon, Pennsylvania and Rhode Island.

“The use of ‘no poach’ and ‘no hire’ agreements by national fast-food franchises unfairly exploits workers, especially low-wage workers,” said Pennsylvania AG Josh Shapiro. “Many workers only learn these agreements exist when they are denied the chance to advance to a better job, earn more money or obtain family-friendly schedule options. It’s wrong and I’m standing up and fighting for the rights of Pennsylvania workers to not be exploited.”


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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