11 states launch probe of ‘no-poaching’ practice
Eleven state attorneys general are launching an investigation of contracts at fast-food chains that prevent their workers from switching franchises, targeting a practice some economists say drags down wages for millions of Americans.
The group will send letters to eight fast-food companies — including Burger King, Dunkin’ Donuts, Panera and Wendy’s — requesting information about “nopoaching” agreements that bar or restrict managers from hiring workers at another store in the same chain.
“No-poach agreements unfairly limit the freedom of fast-food and other lowwage workers to seek promotions and earn a better living,” said Massachusetts Attorney General Maura Healey, whose office is leading the probe.
No-poaching clauses have come under increasing scrutiny by Democrats and some policy experts over the past several years as wage growth remains a persistent weakness for an otherwise strong and growing economy.
Economists say barring employees from switching between chain locations unfairly prevents them from bargaining for higher wages, while businesses maintain they are necessary for local firms to recoup the costs of their investments in personnel.
“Many workers only learn these agreements exist when they are denied the chance to advance to a better job, earn more money or obtain family-friendly schedule options” at a different franchise location, Pennsylvania Attorney General Josh Shapiro noted.
Sens. Cory Booker, DN.J., and Elizabeth Warren, D-Mass., said in March they would introduce legislation to make no-poaching agreements illegal, calling them an “anti-competitive” practice. A Booker policy aide estimated 70,000 fast-food restaurants would be affected by the bill.
The U.S. Department of Justice’s antitrust division has also opened an inquiry into the practice. A letter to be sent by the state attorneys general asks the fastfood companies for a range of information about nopoaching.
About 80 percent of fastfood workers are constricted by no-poaching clauses, according to Healey’s office. The other fast-food chains targeted by the states’ investigation are Arby’s, Five Guys Burgers and Fries, Little Caesars and Popeyes Louisiana Kitchen.
Industry advocates have maintained the practice is important for protecting their investments.
Fast-food employees often sign contracts not knowing these provisions prevent them from working at their chain’s other locations.
Along with Massachusetts, the group includes attorneys general in California, the District of Columbia, Illinois, Maryland, Minnesota, New Jersey, New York, Oregon, Pennsylvania and Rhode Island.