Eleven state attorneys general are investigating fast-food chains that may be enforcing “no poaching,” according to the Washington Post. These no poaching agreements prevent managers from hiring workers at a restaurant in the same fast food chain.
The food companies being investigated include Arby’s, Burger King, Wendy’s, Popeyes Louisiana Kitchen, Panera, Five Guys Burger and Fries, Little Caesars, and Dunkin’ Donuts. Massachusetts Attorney General Maura Healey (D) is leading the effort.
McDonald’s was not included in the restaurants targeted by the attorneys general investigation because it recently dropped these agreements. Last year, McDonald’s employees filed a class action against the company for the policy, which does not allow a franchise to hire a McDonald’s worker from another restaurant for a six-month period. The lawsuit provides a clear example of why employees are hurt by these approaches. One mid-level McDonald’s manager, Leinani Deslandes, made $12 an hour and applied for a mid-level manager position that paid $14.75 an hour at another McDonald’s location. The restaurant said she couldn’t get the job because of the anti-poaching policy, according to Courthouse News.
Deslandes’ attorney, Richard McCune, said, “This practice of ‘owning’ an employee not only affected Ms. Deslandes and other employees where their franchise owner will not ‘release’ them, but it artificially holds down the wages of all of the McDonald’s workers that are being paid less than their true market value and are struggling to make ends meet.”
In its complaint, the class action quotes Peter Cappelli, management professor and director of Wharton’s Center for Human Resources. Capelli said that these agreements break anti-trust and employment law because “[c]ompanies could achieve the same results by making it attractive enough for employees not to leave.”
Healey tweeted out the story of a part-time fast food worker who wanted full-time work and was denied the opportunity to earn more money at another franchise.
One fast food worker we interviewed tried to leave her part-time job for a full-time position at another franchise.
When she reported for work at her new job, she was told "you cannot work here."
It's an unfair policy that holds workers back.
— Maura Healey (@MassAGO) July 9, 2018
Attorneys general plan to send a letter on Monday to the eight companies inquiring about their no-poaching agreements, such as how workers were informed of them and which workers don’t have to abide by them, the Post explained.
CKE Restaurant Holdings was hit with a similar lawsuit over their policy recently. These agreements affected workers at more than 70,000 restaurants, said Alan B. Krueger, a Princeton economist who has studied the issue, according to The New York Times. Although employers have these agreements in other industries, the policies are most prevalent at fast food restaurants, economists have found.
In 2016, the Justice Department’s Antitrust Division and the Federal Trade Commission released guidelines on no-poach and wage-fixing agreements, saying that the department would criminally investigate these employers. This year, the DOJ division announced enforcement actions against these agreements.