Fast Food Chains End No Poach Agreements
If you watch the news or read the papers, you’ve likely heard about the plight of low-wage workers across the country. The minimum wage issue has dominated the news landscape for years now, but another issue that’s been less on the radar is the “no-poaching provision” in many national fast-food franchise agreements or contracts. What this clause has historically dictated is that fast-food workers could not move or transfer to other franchises within the same corporation for better positions or higher wages, sometimes unbeknownst to them. However, Attorney General Bob Ferguson of Washington state has succeeded in garnering the compliance of seven fast-food corporations to remove this provision from their franchise documents through legally binding assurances of discontinuance.
AG Ferguson advocated for the reversal of this clause as it decreased competition and negatively impacted the raising of wages since fast food franchises felt that they would not need to give raises to “keep” their employees. This prompted his Antitrust Division to launch the investigation and pursue a lawsuit since the no-poaching provision seemed to violate the “unreasonable restraints of trade” language within the Consumer Protection Act. Ferguson stated, “Companies must compete for workers just like they compete for customers. 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 succeeded in negotiating with seven major corporations, including Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carl’s Jr., Cinnabon, Jimmy John’s, and McDonald’s, though he is still investigating more. Not only will these chains stop the “no poaching” practice at their 500+ Washington locations, but they will roll out the change nationally. This change impacts more than tens of thousands of employees at over 25,000 store locations across the country.
Six of the franchises must remove the no-poach language in Washington state within 120 days from July 12th, while McDonald’s will do so even sooner—within 60 days. Within the other 49 states, as well as the territories of Puerto Rico and the District of Columbia, the corporations only have to update the franchise agreements when contracts come up for renewal. If the agreements are still in effect, the franchises must notify all franchisees, or independent owners, that they cannot enforce the no-poach agreement, or risk incurring civil penalties.
This is definitely a win for low-wage workers, as the amendment opens up competition and procures more freedom of choice for these workers. Time will tell if other states follow suit in holding more local and national chains accountable for this blatant restriction imposed on fast-food workers.
Netchex is the leading HCM partner helping you improve workforce management and optimizing benefits for your employees. Our powerful, yet user-friendly technology simplifies the business of HR and bring self-service features to your company to provide more independence for your team.
Talk to us to find out how to put Netchex to work for your company. Take a look at our full suite of HCM solutions that grow with your business, including payroll, compliance, HR, benefits administration, and time & attendance, backed by experts and the best technology in the industry.