For years, franchise businesses in various industries have included “no-poach” provisions in franchise agreements that restrict employees from moving among locations within the same franchise system. While these provisions had gone largely unnoticed, more recently they have garnered much attention, with economists pointing to them as a possible source of wage stagnation and antitrust practitioners challenging them as illegal restraints of trade. Around the same time state attorneys general successfully put a stop to the practice of franchise no-poach agreements at thousands of franchise establishments nationwide, several private class actions were also filed seeking compensation for workers subject to these provisions. To date, these lawsuits have hit a number of roadblocks, including class certification difficulties and arbitration clauses, and have not resulted in any meaningful victories for plaintiffs. Nevertheless, private enforcement efforts are ongoing in a number of cases, and if successful, may provide victims with compensation for their losses.
By Gregory Asciolla & Jonathan Crevier
For years, cashiers, fry-cooks, managers, and other employees working for the biggest restaurant chains across the country have been blocked from seeking higher wages and better positions at competing restaurants in the same chain due to restrictions placed in franchise agreements. These “no poach” clauses could prevent a cashier at a McDonald...