July 9, 2018 / 8:36 PM / 3 months ago

U.S. states probe fast-food franchise deals not to poach workers

WASHINGTON (Reuters) - A group of U.S. state attorneys general is investigating whether Five Guys, Panera, Burger King and other big fast food chains are using “no-poach” rules in franchise agreements to hold down wages and limit employee advancement, the officials said on Monday.

FILE PHOTO: Burger King logo is seen in a restaurant in a communist-era building in Warsaw, Poland October 2, 2017. REUTERS/Kacper Pempel

Massachusetts Attorney General Maura Healey, along with attorneys general of nine other states and Washington, DC, sent letters to Arby’s, Burger King, which is owned by Restaurant Brands International Inc (QSR.TO), Dunkin’ Donuts (DNKN.O), Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen and Wendy’s (WEN.O) to ask for franchise agreements and other documents that relate to no-poach provisions.

Under a no-poach pact, companies agree to not hire away each other’s workers.

FILE PHOTO: A Panera restaurant logo is pictured on a building in North Miami, Florida March 19, 2016. REUTERS/Carlo Allegri

The companies were asked to detail any no-poach pacts, including being asked whether they informed employees of potential agreements.

Restaurant workers make a median of $9.81 per hour and $20,410 annually, according to the Labor Department’s Bureau of Labor Statistics.

“By limiting potential job opportunities, these agreements may restrict employees’ ability to improve their earning potential and the economic security of their families,” the attorneys general said in the letter.

Wendy’s spokeswoman Heidi Schauer said the company did not have an anti-poaching provision in franchise agreements.

“Wendy’s does not impose any restrictions that prohibit franchisees from hiring or soliciting employees from other franchisees,” she said in an email.

Arby’s, Burger King, Dunkin’ Donuts, Five Guys, Little Caesars, Panera and Popeyes did not immediately respond to a request for comment.

The U.S. Justice Department has said that no-poach agreements are illegal under antitrust law since they restrict competition for employees and potentially deprive workers of better job opportunities. They have been found previously in the railroad industry and among some tech companies.

The department did not immediately respond to a request for comment on this probe.

In June, a former McDonald’s (MCD.N) employee, Leinani Deslandes, filed a lawsuit against the chain alleging the restaurant’s no-poach agreement violated the Sherman Antitrust Act and had prevented her from obtaining a better position with a rival franchise.

Jurisdictions in the probe include California, District of Columbia, Illinois, Massachusetts, Maryland, Minnesota, New Jersey, New York, Oregon, Pennsylvania and Rhode Island.

Reporting by Diane Bartz; Editing by David Gregorio

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