Suit: BK’s ‘no poaching’ rule held down workers
Fast-food giant’s employees were denied pay raises, opportunities
Burger King workers have been denied pay raises and opportunities for advancement because the fast-food giant illegally required franchise owners to agree not to hire each other’s workers during their employment or for six months afterward, a federal lawsuit charges.
The so-called “no hire” and “no solicitation” rules have been included in standard franchise agreements since at least 2010, according to the suit filed in early October in U.S. District Court in Miami.
The suit, which seeks class-action status on behalf of all U.S. Burger King workers past and present since 2010, was filed by Miami-based law firm Podhurst Orseck PA and Radnor, Pa.-based Kessler Topaz Meltzer & Check LLP. It names Burger King Corp. and Burger King Worldwide Inc., both headquartered in Miami, as defendants. Jarvis Arrington, a former line cook at a Chicago-area Burger King restaurant, is the lead plaintiff.
Arrington was earning $10 an hour when he attempted “to increase his pay rate and better his working conditions” by trying and failing to get a job at another Burger King restaurant in Chicago, the suit states. After being told his transfer would need to be approved, he did not hear back from the restaurant to which he had applied and sought employment outside of Burger King, the suit said.
Burger King Corp. on Monday did not respond to requests for comment about the lawsuit.
“No solicitation” clauses have been a common part of franchise contracts within the fast-food industry and have recently come under fire for suppressing wages and opportunities for already lowpaid workers throughout the United States. Unlike “non-compete” clauses that employees are often required to sign when they begin a job, workers are often unaware of the existence of “no solicitation” clauses until they try to move to a location owned by another franchisee.
In October 2016, the Department of Justice Antitrust Division and the Federal Trade Commission jointly issued guidance warning that “naked wage-fixing or nopoaching agreements among employers, whether entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws.” The guidance
adds that “firms that compete to hire or retain employees are competitors in the employment marketplace,” and it is “unlawful for competitors to expressly or implicitly agree not to compete with one another, even if they are motivated by a desire to reduce costs.”
While all Burger King restaurants benefit from shared distribution, operational and promotional strategies, franchisees are told by the company that they are competitors of other franchisees and companyowned restaurants, the suit states.
In September, Washington state’s attorney general announced it had forged agreements with 23 wellknown, fast-food chains, including Burger King, to stop enforcing no solicitation clauses, also known as “no poaching” pacts, within their companies. The other companies included McDonald’s, Pizza Hut, Papa John’s, Denny’s, Cinnabon, Arby’s, Buffalo Wild Wings, and Jimmy John’s.
Although Burger King said it agreed to immediately stop enforcing the clause and would omit it from new and renewing franchise agreements, the lawsuit asserts it remains in force within “numerous franchises” continuing to operate under previous versions of the company’s standard franchise agreement.
Asked how the plaintiff ’s attorneys know this, Kimberly A. Justice of Kessler Topaz Meltzer & Check said by phone: “It’s more the impact of the conspiracy. Just because they agreed to stop doesn’t mean wages have returned to a normal competitive level. [Plus] they’re not changing the language of the franchise agreements until they are up for renewal.”
Similar class-action lawsuits have been filed against McDonald’s, Jimmy John’s and Little Caesars.
A Feb. 15 story posted by The Nation described how enforcement of the clause hampered efforts by a plaintiff in the McDonald’s suit to advance through the company’s ranks to a general manager job. When managers at an Apopka, Fla., McDonald’s franchise discovered in 2015 that department manager of guest services Leinani Deslandes was pregnant, they canceled her planned weeklong training course at the company’s Hamburger University in Illinois, her suit claims.
The franchise used the “no solicitation” clause to block Deslandes from taking a job at another McDonald’s for higher pay, telling her she was “too valuable,” her suit states.
In June, an Illinois federal judge denied McDonald’s motion to dismiss the case, stating Deslandes had adequately claimed that the company’s no solicitation clause was a violation of Sherman Act antitrust law.