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Unfair Fast-Food Employment Contracts Are Being Targeted by 11 States

Attorneys General are questioning so-called “no hire” and “no poach” rules, which affect a majority of fast-food workers

State Attorney Generals Target Unfair Fast-Food Employment Contracts Rosebc10987/Shutterstock

Despite a low unemployment rate, wages are stubbornly stagnant — particularly in the restaurant industry, where an array of factors, including so-called “no hire” or “no poach,” rules keep workers from taking home a living wage.

Major chains like Dunkin’ Donuts, Wendy’s, Burger King, Arby’s, Five Guys, Little Caesars, Popeyes, and Panera all force new employees to sign franchise agreements. Within that fine print is a clause that prevents the workers, who often cobble together paychecks from multiple jobs in order to make ends meet, from working at more than one location of the restaurant chain at a time.

It’s a practice so common among franchises — studies show that up to 80 percent of fast-food workers are affected by these clauses — that few lawyers, activists, and legislators have successfully questioned it or petitioned for a change. But now, 11 state attorneys general are fighting these so-called “no poach” rules together, by putting pressure on companies with especially strict policies. They’re arguing that such clauses in franchise agreements, which many workers don’t even know exist, prevent employees from negotiating for higher wages, and are a key reason why wages across the U.S. aren’t rising.

“No-poach agreements unfairly limit the freedom of fast-food and other low-wage workers to seek promotions and earn a better living,” Massachusetts Attorney General Maura Healey (D), told the Washington Post. Her office is leading the probe, which will send letters to fast-food companies asking for details about their “no hire” and “no poach” agreements. Joining her are Attorneys General from California, the District of Columbia, Illinois, Massachusetts, Maryland, Minnesota, New Jersey, New York, Oregon, Pennsylvania, and Rhode Island. The U.S. Department of Justice’s antitrust division also opened an inquiry into these franchise rules, according to the Washington Post.

Not only do hourly staffers in the restaurant industry collect some of the lowest wages in the country, they also rarely receive benefits, are unable to unionize in order to fight for better pay and better treatment, face increasing rates of discrimination and harassment, and, per a recent Supreme Court decision, may no longer join class-action lawsuits.

And the “no hire” contracts are especially egregious considering the discrepancies between those enforcing the contracts and those signing them. The CEO of Dunkin’ Donuts, Nigel Travis, took home $5.3 million last year, and the company made more than $860 million in revenue in 2017. But most of Dunkin’s employees make minimum wage, proving that while America might think it runs on Dunkin’, it really runs on cheap labor.

11 states launch investigation targeting fast-food hiring practices [WaPo]