Eight more restaurant chains to no longer ban worker poaching

Eight additional restaurant chains have committed to scrap policies that limit workers’ ability to move from one franchise to another in search of better wages and work opportunities, Washington state Atty. Gen. Bob Ferguson announced.

In July, seven restaurant and fast-food chains, including Carl’s Jr. and Cinnabon, agreed to remove these rules from their franchise contracts. Now Applebee’s, IHOP, Five Guys Burgers & Fries, Panera Bread, Church’s Chicken, Jamba Juice, Little Caesars and Sonic — which, combined, have more than 15,000 locations nationwide — have followed suit, Ferguson announced Monday.

The decision is a result of Ferguson’s investigation into the food industry’s “nopoach” policies, which critics have long blamed for keeping wages low, hindering career mobility and inhibiting fair competition. Ferguson has cited antitrust laws, saying that businesses should compete for workers “the same way as they compete for customers.”

Under the provision, a Jamba Juice employee who lives in Cerritos and works at a franchise in Santa Monica, for example, could not get a job at a Jamba Juice franchise that is closer to home. And because the franchises know that their workers can’t defect to other franchises in the same chain, they might have less reason to offer higher wages or other incentives to retain their workers.

Companies have said the provision is meant to protect employers’ investments in training personnel.

“Businesses can’t rig the system to avoid competition,” Ferguson said in a statement. “Other fast-food companies that use nopoach provisions are now on the clock to accept a similar deal or face litigation from my office.”

The issue was raised last year by two Princeton professors, Alan Krueger and Orley Ashenfelter, who found that no-poach clauses in franchise agreements may have been a cause of a lack of wage growth in the United States. They said these rules affected 70,000 restaurants nationwide, the New York Times reported.

Without no-poach clauses, workers can find jobs that pay higher wages, are closer to where they live or offer better work hours, and companies gain access to a wider talent pool, Krueger said.

Church’s Chicken, which has 63 locations in California, rarely had a reason to even think about invoking the clause, Executive Vice President Craig Prusher said in a statement. “We want all current and prospective employees to know they are free to work where they choose.”

The other seven companies did not respond to requests for comment.

Under the agreements, the eight chains will immediately end the practice at all U.S. locations and stop adding no-poach clauses to new contracts. In Washington state, they will have 90 to 120 days to remove the clauses from existing contracts, and in the rest of the U.S., contracts will be modified as they come up for renewal.