Some States Are Questioning Fast Food Chains' Non-Compete Agreements: Here's What We Know So Far
A coalition of 11 state attorneys general is leading the inquiry.
Fast food jobs are notoriously low paying, high turnover gigs. But a new, multistate inquiry from a coalition of state attorneys general is looking into whether part of the problem is being artificially created by fast food franchises themselves when they make workers sign strict “no-poach” contracts, preventing them from jumping to a better paying position at another outpost of the same chain.
According to The Washington Post’s Wonkblog, Massachusetts Attorney General Maura Healey is leading the probe that includes ten other attorneys general across the country. “No-poach agreements unfairly limit the freedom of fast food and other low-wage workers to seek promotions and earn a better living,” Healey was quoted as saying.
Amazingly, Healey’s office suggests that 80 percent of fast food workers are locked into these types of agreements. However, to start, the coalition has sent a letter to eight major fast-food brands—Arby's, Burger King, Dunkin' Donuts, Five Guys, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen and Wendy's—asking for copies of these agreements as well as other relevant information by August 6.
Though a statement from the International Franchise Association argues that these agreements are necessary to keep employees from jumping ship before the expense to train them has been recouped, opponents of these clauses suggest the industrywide benefit of suppressing wages may be the real driving factor. “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” elsewhere, Pennsylvania Attorney General Josh Shapiro told WaPo.
Though this latest action taken by the coalition, which is composed entirely of Democrats, is bringing attention to “no poach” clauses, the issue isn’t new. Democratic Senators Cory Booker of New Jersey and Elizabeth Warren of Massachusetts introduced legislation earlier this year to ban the practice, though the Republican congress hasn’t furthered the bill. However, the U.S. Justice Department’s antitrust division has opened an inquiry into the practice as well. Meanwhile, as the Washington Post points out, fast food chains aren’t the only one who take advantage of this practice: Jiffy Lube, H&R Block, and Anytime Fitness are just a few of the other chains that make employees sign similar agreements.
As for the fast food chains mentioned, according to the New York Times, Dunkin Donuts and Wendy’s responded to a request for comment by stating that they do not restrict hiring among franchises; however, the Times states that these companies do have some restrictions about hiring between franchises and the corporate entity. None of the other companies have yet responded.