NEW YORK – Many fast food franchises include a contract clause that prohibits hiring employees from other franchises or from another store in the same franchise. This hurts fast food employees, according to New York State Attorney General Barbara D. Underwood.
Earlier this year, the Department of Justice said such agreements are illegal and are similar to price-fixing. The agreements violate standing anti-trust laws, according to the DOJ.
Underwood, part of a coalition of 11 Attorneys General, sent a letter Monday to eight national fast food franchisers about “no-poach” agreements in franchise contracts, which restrict a franchisee’s ability to recruit or hire employees of another franchisee of the same chain. Prompted by concerns that these agreements hurt low-wage workers and limit their ability to get better jobs, the Attorneys General have requested information and documents from these companies.
“Workers deserve to have the opportunity to earn higher wages and seek promotions — yet no-poach provisions make that impossible,” Underwood said. “My office will continue to protect the rights of workers in New York and across the country.”
According to the letter, 58 percent of major franchisers have no-poach provisions in their franchise agreements, and the number is even higher – 80 percent – for fast food franchisers. Worker advocates argue these provisions have led to persistent low wage growth and are anticompetitive in nature. The letter sent today asserts that no-poach provisions make it difficult for workers to improve their earning potential by moving from one job to another or seeking a higher-paying job at another chain location, and that many workers are unaware that they are subject to these no-poach provisions.
The letter was sent today to Arby’s, Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen, and Wendy’s. The letter asks these restaurants to provide documents that include copies of franchise agreements and communications related to no-poach provisions by August 6, 2018.