July 13, 2018

Warren, Booker Urge Nearly 100 Franchise CEOs to Abandon Collusive "No Poach" Clauses

Letter follows bill Senators introduced in February to crack down on such clauses; Seven fast food chains agreed this week to end no poach agreements nationwide

Text of the letter (PDF)

Washington, DC - United States Senators Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.) urged nearly 100 large franchise CEOs to abandon collusive "no-poach" agreements, which prohibit franchisees from hiring away workers employed by another franchisee. In a letter sent today to 89 CEOs of the country's largest franchises, the Senators criticized how such agreements suppress workers' wages by limiting the mobility of franchisee employees.   The letter comes after seven national fast food chains announced this week that they would remove no-poach clauses from their franchise agreements.

"We are concerned that restrictions like these on worker mobility, including through no-poaching clauses and non-compete agreements, are keeping workers stuck and wages down," the Senators wrote. "If employees are limited in their ability to switch jobs - say, for a better-paying position or for more reliable hours - they are unable to maximize their compensation for the value they bring to a current or prospective firm."

"We urge you to remove from your franchise agreements any language that imposes limits on worker mobility; doing so will increase wages for employees and ensure that businesses can recruit and retain the best workers," the Senators continued.

Earlier this year, in a letter to Warren and Booker, the Department of Justice affirmed guidance it had issued in 2016 clarifying that agreements between employers not to hire each other's workers are likely illegal under antitrust law. This affirmation was a response to a letter Warren and Booker had sent to the DOJ last year asking the agency to detail its interpretation of the 2016 guidance and whether it was investigating the use of "no poach" agreements. Earlier this year, Warren and Booker introduced a bill - The End Employer Collusion Act - to clarify that no-poach agreements in the franchise context are illegal under federal antitrust law.  This week, McDonald's, Auntie Anne's, Arby's, Carl's Jr., Jimmy John's, Cinnabon and Buffalo Wild Wings announced that they had agreed to no longer enforce no-poach clauses at all of their locations nationwide. 

In June, Warren and Booker took further action to address anti-competitive employment practices when they questioned DOJ and the Federal Trade Commission (FTC) about policies allowing employers to exchange wage data without sharing it with workers -- a practice that unfairly advantages employers over workers, holds down workers' wages, and facilitates workplace discrimination.