Restaurants End “No-Poach” Laws

 In Employment Law, Wage Law

Washington’s Attorney General recently announced that in lieu of a lawsuit, several large fast-food corporations will discontinue nationwide practices that restrict worker mobility and decrease labor competition by prohibiting workers from moving among a restaurant’s various franchise locations. As a result, companies will now decline to enforce provisions in franchise agreements – “no-poach” clauses – that prevent workers from obtaining better positions and wages. Due to the discontinuation of this practice, many workers who are employed in this environment will experience significant rights advancement.

How the Case Arose

In 2017, the New York Times published an article regarding the downward pressured faced by fast-food franchise workers. As a result, in 2017, the Attorney General commenced an investigation into “no-poach” clauses among the state’s fast food restaurants. Many times, these provisions are placed in lengthy agreements between the fast-food companies and workers, which often leads to workers agreeing to the clause without even knowing of its existence. Agreeing to these clauses often results in workers experiencing difficulty moving between restaurants at different franchises in the same chain. No-poach agreements have the effect of decreasing competition and reducing opportunities for workers, which in turn results in reduced wages. As a result, this decision represents a significant step forward in the wage and hour rights of workers in Washington and throughout the country.

The Consumer Protection Act

Underlying the District Attorney’s case in this matter was the argument that these “no-poach” laws violated the Consumer Protection Act. This body of law prohibits unreasonable burdens on trade. Workers who can not move between corporate branches are often left with less incentive to obtain raises.

How the Situation Has Been Resolved

Rather than continue using contracts with “no-poach” agreements, many franchise restaurants have entered into legally binding contracts or assurances of discontinuance, which promise that restaurants will discontinue these habits to avoid the risk of lawsuits. While this decision will affect 500 locations in Washington, the decision will also affect more than 25,000 locations in the country. The companies affected by this law include Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carl’s Junior, Cinnabon, Jimmy John’s, and McDonald’s. These franchises must remove this language within 120 days. In the other 49 states, restaurants have agreed to update existing franchise restrictions when worker contracts come up for renewability. Additionally, restaurants are required to both prohibit the enforcement of these terms and notify all franchise locations about the terms of these requirements. While many states have 120 days to comply with these requirements, McDonald’s has agreed to follow these provisions within 120 days.

The Ongoing Results of the Case

The Attorney General’s Office of Washington state is currently investigating other companies that require workers to sign “no-poach” agreements and expects that all fast-food corporations will remove these clauses from contracts. If other companies fail to file similar lawsuits, the Attorney General’s Office is poised to file additional lawsuits. If you are a worker who believes that your employer has violated wage and hour laws, you should not hesitate to speak with an experienced attorney at Herrmann Law Offices.

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