AGs Take Aim at No-Poach Rules in Fast Food

(AP Photo/Gene J. Puskar, File)

BOSTON (CN) – A coalition of attorneys general from 10 states and the District of Columbia are demanding information from eight major fast-food chains about their use of “no-poach” agreements between franchisees, which prohibit hiring employees from another franchise in the same chain.

“No-poach agreements unfairly limit the freedom of fast-food and other low-wage workers to seek promotions and earn a better living. Our goal through this action is to reduce barriers and empower workers to secure better-paying and higher-skill jobs,” according to a letter released Monday by Massachusetts Attorney General Maura Healey and 10 other AGs.

The coalition’s letter requests documents related to no-poach agreements, including franchise agreements and all communications about the implementation of no-poach rules and the business rationale for such agreements.

The letter was sent to Arby’s, Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen and Wendy’s, and asks the fast-food chains to provide the information by Aug. 6.

It cites the AGs’ law enforcement roles to protect the rights of workers in their respective states.

“Given these roles, we are concerned about the use of no poach agreements among franchisees and the harmful impact that such agreements may have on employees in our states and our state economies generally. By limiting potential job opportunities, these agreements may restrict employees’ ability to improve their earning potential and the economic security of their families,” according to the letter signed by Healey and AGs from California, District of Columbia, Illinois, Maryland, Minnesota, New Jersey, New York, Oregon, Pennsylvania and Rhode Island.

According to the letter, 58 percent of major franchisors have no-poach provisions in their franchise agreements, and the number is even higher, at 80 percent, for fast-food franchisors.

Worker advocates argue these provisions have led to persistent low wage growth and are anticompetitive in nature. The AGs asserts that no-poach rules 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 franchise location, and that many workers are unaware they are subject to such restrictions.

“The use of ‘no poach’ and ‘no hire’ agreements by national fast-food franchises unfairly exploits workers, especially low-wage workers,” Pennsylvania AG Josh Shapiro said in a statement. “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.”

In connection with the investigation, Massachusetts AG Healey’s Fair Labor Division interviewed workers impacted by no-poach agreements, including a McDonald’s worker, Maria, who was prevented from leaving her part-time job at one McDonald’s location in Iowa to take a full-time position at a different location.

When Maria showed up for work at the second McDonald’s location, she was allegedly told: “We told you we were going to hire you but cannot because you were working at another McDonald’s and so you cannot work here.”

Spokespeople for the National Restaurant Association and the eight fast-food chains that received the letter did not respond to email requests for comment.

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