Investigation: Possible 'No-Poach' Employee Agreements

Fast-food restaurants probed about restricting competition for employees and keeping hourly wages low.

July 12, 2018

WASHINGTON, D.C. - A group of U.S. state attorneys general is looking into the possibility that some large fast-food chain are using “no-poach” rules in their franchise agreements to hold down wages and limit employee advancement, according to Reuters.

Under a no-poach pact, companies agree to not hire away each other’s employees.

Currently, the group of state officials is looking at Five Guys, Panera Bread and Burger King and is seeking copies of franchise agreements and other documents from numerous chains, ranging from Dunkin’ Brands and Little Caesars to Popeye’s and Wendy’s.

Restaurant workers earn a median of $9.81 per hour and $20,410 annually, according to the Labor Department’s Bureau of Labor Statistics. By limiting potential job opportunities, a “no-poach” agreement could impact an employee’s ability to improve their earnings and career potential.

According to the U.S. Justice Department, no-poach agreements are illegal under antitrust law because they restrict competition for employees, keep wages low and potentially deprive workers of better job opportunities. In the past, they’ve been discovered in the railroad industry and in some tech companies.

In June, a former McDonald’s employee filed a lawsuit against the chain claiming that the company’s no-poach agreement violated the Sherman Antitrust Act and prevented her from obtaining a better job with a rival franchise.