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Church's, Sonic, Little Caesars agree to delete no-poach clauses in US

August 21, 2018

Employees at 15,000 U.S. restaurant locations just got more latitude in changing jobs and possibly even gaining promotions. Eight chains agreed this week to stop so-called "no-poaching" agreements that ultimately limited employees' rights to leave a job with one franchisee to work for another franchisee within the same chain. Among those eight chains involved in this week's action, are two QSRs —  Church's and Sonic chains —  and one pizza chain, Little Caesars, according to the New York Times. 

Fair labor advocates say the no-poach practices effectively kept wages low for some of our economy's lowest-paid workers anyway because the clauses prevented workers from moving to a location with a better job, shift or even more preferable management. The no-poach clauses were part of their contracts with franchisees. 

Last year, two Princeton economists reported on the advancement-limiting effects no-poach rules have on low-wage workers, particularly those working in the QSR restaurant sector. The Washington State attorney general's office investigated in that jurisdiction after reading the Princeton report and earlier this year obtained agreements to drop no-poach clauses at Arby's, Carl's Jr. and McDonald's, nationwide.

"The train's left the station," Washington State Attorney General Bob Ferguson to the New York Times this week. "These corporations either get on board, or they're going to end up in court. But there is no middle ground."

The study that gave birth to the eventual legal actions affected 70,000 U.S. restaurant, estimated also to include 25 percent of the nation's QSR locations. The report looked at 40 restaurant companies and found that the no-poach clauses were intended mainly to limit competition and turnover at the chains. 

Attorneys general in 10 states are also investigating similar agreements in their jurisdictions.