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Washington Attorney General announces end to ‘no-poach’ deals at franchisors

July 13, 2018

Seven fast-food firms agreed to remove “no-poach” provisions in franchise agreements that prohibited franchisees from hiring workers from one another, Washington state Attorney General Bob Ferguson announced Thursday. The move was made to avoid a lawsuit from the office.

The fast-food firms agreed to end the practice at their Washington state locations as well as their national locations, affecting tens of thousands of workers at more than 25,000 locations, according to the Attorney General’s office.

“Companies must compete for workers just like they compete for customers,” Ferguson said in a statement. “They cannot manipulate the market to keep wages low.”

Economists believe that no-poach language decreases competition and can help lead to wage stagnation, according to the office. Under such deals among fast-food franchises, a worker at one franchise would not be able to get a job at another franchise of the same company.

Firms taking part in the agreement to end no-poach language included Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carl’s Jr., Cinnabon, Jimmy John’s and McDonald’s.

Earlier this week, Attorneys General in 11 other states also sent letters to fast-food chains seeking information on no-poach agreements over concerns such agreements were having on workers.

The International Franchise Association has already reported that many brands have eliminated no-poach language from their agreements.

In an upcoming article in Staffing Industry Review magazine, attorney Dan Forman addresses the topic of no-poaching agreements amid a warning from the Department of Justice against their use. The issue will be available online at the end of July.