Competition Matters

Ever wonder if the grass is greener elsewhere? Employees of Dunkin’ Brands, Arby’s, Five Guy Burgers and Fries, and Little Caesars are now able to find out. In March of 2019, their respective companies reached a settlement with Maryland and other states’ Attorneys General to end the use of agreements that prevent workers from moving from one franchise to another within the same restaurant chain.

So-called “no-poach” agreements are arrangements to not solicit another company’s employees (or in this case another franchise’s employees). These agreements are often made in secret and without the knowledge of employees and have the potential to restrict competition by preventing companies from recruiting or competing for employees based on competitive pay or favorable employment terms.

In July 2018, the Maryland Attorney General in conjunction with 14 other Attorneys General led an investigation into numerous fast food companies for alleged use of no-poach agreements. The Attorneys General requested documents from the companies to include copies of franchise agreements and communications related to no-poach agreements. As one Attorney General put it: “This practice gives franchise locations less incentive to give raises to employees and reduces competition for workers. This drags down the wages for millions of Americans.”

Under the terms of the settlements, fast-food companies agreed to stop including no-poach provisions in any of their franchise agreements. In addition, they agreed to stop enforcing any agreements already in place. Employers are also required to post notices in all locations to inform their employees of the settlements. Ultimately, these actions will help low-wage workers secure better paying positions and for some it may prove true that the grass is indeed greener elsewhere.

No-poach agreements are not limited to specific industries. If you suspect or have knowledge that any of the vendors you deal with are taking actions like the ones outlined above, or have questions about how to recognize anticompetitive activity, please call the Antitrust Section of the Ohio Attorney General’s Office at 614-466-4328.