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Burger King “No-Poach” Agreements Antitrust Class Action

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Burger King Meal with Burger, Fries, and Drink

The complaint for this class action alleges that Burger King franchises are required to agree to no-poach agreements and that these agreements are anticompetitive and illegal and keep worker wages down.

The class for this action is all persons in the US who work or worked for a Burger King restaurant operated by Burger King itself or a franchisee, from at least 2010 on.

The complaint claims that the average fast food worker in the US makes $8.29 an hour, while the US “living wage”—the amount required to meet the basic needs of a family—is $15.12. One of the things contributing to this wage gap, the complaint says, is the existence of no-poach agreement, in which one owner of a particular franchise agrees not to lure away employees of another owner of the same franchise. 

According to the complaint, a Princeton study says that no-poach agreements can “significantly influence pay” by keeping owners from competing for the best workers. Also, it says, a Chicago Law School study finds that such no-poach agreements to be anti-competitive and that they will tend to suppress worker wages. 

Burger King began putting no-poach clauses in its franchise agreements “[b]eginning no later than 2010,” the complaint says. All those who wanted franchises had to agree to these no-poach provisions along with all the other requirements for their franchises.

Why can’t an employee simply apply to another fast food chain? The complaint says that employee expertise is not easily transferrable. Chains may have or require the use of certain brands or models of equipment, computer systems, office hardware, and point-of-sales systems. Also, it says that many chains simply do not like to hire the employees of other chains. So workers can be stuck with working for a single restaurant chain, and even with a single location of that single chain.

But things have been changing. The complaint claims that a federal court upheld an antitrust claim against McDonald’s for its no-poach agreement clause in June 2018, and another ruled similarly about Jimmy John’s no-poach agreements. Some state attorneys general are also investigating fast food chains’ subject of no-poach agreements. According to the complaint, “as of October 15, 2018, at least thirty national chains, including Burger King, have already entered consent decrees with the Washington Attorney General, pledging to remove no-poach provisions from their franchise agreements.”

This is good going forward, but the complaint claims that chains like Burger King should be held responsible for the way they suppressed the wages of workers for so many years. These companies should pay antitrust damages, the complaint says, and repay workers for their lower earnings.

The complaint sets forth its claims under antitrust laws.

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