Fast Food Non-Compete Clauses Hurt Employees
Fast food restaurants are everywhere, and provide thousands of jobs to workers who often have little to no other employment options. Fast food employees deal with low, stagnant wages in order to make ends meet. And with the inevitable rise of automation within the industry, many fast food employees are watching their jobs disappear right before their eyes. But workers who want to switch to a better paying job within their field face a troubling obstacle: fast food non-compete and no-poach clauses.
Non-compete clauses are terms in hiring contracts that prevent workers from seeking employment with other companies within the same industry. They are typically enacted by businesses in sensitive areas, like the tech industry, to prevent trade secrets from leaking to competitors.
Similarly, no-poach agreements prevent franchise owners from hiring workers who are current or former employees of a different franchise within the same restaurant chain.
Non-compete clauses and no-poach agreements are commonplace in a number of industries, including fast food franchises. It’s been reported that about 80% of fast food workers are constricted by non-compete and no-poach clauses, severely limiting their job prospects.
The practice of enacting these clauses on typically low-wage employees has been a controversial topic for years, but has only recently made headlines when attorneys general from 11 states and the District of Colombia began investigating the practice. The attorneys general have requested documents from eight prominent fast food chains, including Arby’s, Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes, and Wendy’s. Conspicuously absent from the list is McDonalds, who are facing their own separate class action over no-poach clauses.
In an email statement, Illinois Attorney General Lisa Madigan stated the reasoning behind the investigation.
“No-poach agreements trap workers in low-wage jobs and limit their ability to seek promotion into higher-paying positions within the same chain of restaurants. It unfairly stops low-income workers from advancing and depresses their wages.”
This isn’t the first time Madigan has raised this issue on behalf of fast food employees. In 2016, Madigan’s office sued sandwich maker Jimmy John’s for “imposing highly restrictive non-compete agreements on its employees.” The case ultimately settled for a reported $100,000 and the removal of all non-compete clauses that do not comply with Illinois law.
It will be interesting to see how this case develops, especially if it gains traction on a national level.
Wexler Wallace represents clients who have been harmed by unfair and unscrupulous working conditions. To learn more about our employment litigation work, click here.