Non-Compete Agreements Under Attack From States

ATTORNEYS GENERAL TARGET EIGHT FAST FOOD FRANCHISES

In an effort to boost employee wages and provide flexibility to change locations, attorneys general from 11 states are asking eight fast food franchises to provide documents regarding non-compete or no-poaching clauses in their employee contracts. The attorneys general argue that non-compete and no-poach agreements can limit a worker’s future job prospects, cause low wage growth, and restrict the employee’s earning potential, which is not only detrimental to the employee, but also to the state’s overall economy. By bringing this issue to light, the attorneys general hope to reduce barriers and empower workers to secure better-paying and higher-skill jobs.

In their letter the attorneys general cited to a study from July of 2017 that found 80 percent of fast food restaurants have non-compete clauses. This finding raised concerns about fairness for low-wage workers. The eight fast food franchises from which the attorneys general requested documentation are: Arby’s, Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen, and Wendy’s. These restaurants are some of the largest fast food stops in the country and, depending on the information obtained in response to this request, other restaurants will likely receive a similar request.

TRENDING: ABOLISHING NON-COMPETES IN FAVOR OF EMPLOYEES

This recent request by the attorneys general follows a nationwide conversation to get rid of non-competes in favor of a more pro-employee agenda. The use of non-competes and their determinant to employees is often the center of conversation these days and has been widely discussed in Congress – you may recall a previous tip regarding the introduction of the Workforce Mobility Act (if not, click here for a refresher). While the information request from the attorneys general is in its early stages, and it is unknown to what extent restaurants will cooperate and provide information, there is no denying it is further evidence of a trend to abolish non-competes to foster more competition and professional growth for employees.

If you have any questions or would like to discuss this matter in more detail, please contact your Thompson Coe attorney at (651) 389-5000 or at myHRgenius@thompsoncoe.com. You can also find helpful information and resources regarding this topic and much more at https://myhrgenius.co/.

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