Agreements in which employers or franchises agree not to hire each other’s workers are known as no-poach agreements. They are common, but they are also not legal, because they violate antitrust laws by restraining competition for workers. Lately, fast-food franchises have been targeted by class actions for their no-poach agreements. This class action bring suit against tax preparers H&R Block, Inc. and H&R Block Tax Services, LLC.
The class for this action is all persons in the US who worked for an H&R Block tax office in the US, whether company-owned or franchised, at any time between January 1, 2009 until the anticompetitive conduct alleged in this complaint has stopped.
No-poach agreements work in favor of employers and against workers. The complaint says they “can limit turnover, reduce labor market competition, and reduce workers’ job opportunities…”
The complaint quotes an H&R Block franchise agreement as saying, “During the term of this Agreement, neither franchisee nor any of Franchisee’s Associates will, without H&R Block’s prior written consent … [s]olicit for employment any person who is employed by H&R Block or by any other franchisee of H&R Block…” If franchisees violated the no-poach clause, H&R Block had the right to terminate their right to operate the franchise.
The complaint claims, “The No-Poach Clause is an unreasonable horizontal restraint of trade that is a per se violation of the Sherman Act…” The publication Antitrust Guidance for Human Resource Professionals, states, “Naked wage-fixing or no-poaching agreements among employers, whether entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws.”
Among the types of competition in an economy are the competition of firms for employees, the publication says, and antitrust laws make it illegal for firms to agree not to compete.
The complaint alleges, “The purposes of the No-Poach Clause are to reduce turnover and suppress H&R Block’s employees’ wages by eliminating competition between H&R Block locations for workers…” Unfortunately, employees are not made aware of the no-poach agreements; the complaint calls this fraudulent concealment.
The complaint points out that experience at one tax preparation company is often not transferable to a different tax preparation company. “Since H&R Block other tax preparation chains normally require their franchisees to use company-specific training methods, computer systems, and working procedures, experience with one tax preparation chain is not given credit by other chains…” The no-poach clauses therefore seriously limit employees’ ability to find new work or earn more.