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Jiffy Lube Anticompetitive No-Poach Franchise Provisions Class Action

Jiffy Lube Shop

Jiffy Lube has more than 2,000 shops across the US, and the complaint for this class action claims that it has no-poach provisions in its standard franchise agreements. The complaint alleges that wages at Jiffy Lube shops are low and that the no-poach provisions are part of the reason. 

The class for this action is all current and former employees in the US of a Jiffy Lube shop operated by Jiffy Lube or a franchisee from at least 2010 on. 

The complaint opens with these lines: “Average hourly pay at Jiffy Lube shops in the United States ranges from approximately $8.14 per hour for an Entry Level Technician to $16. 88 per hour for an lnspector. In contrast, the United States “living wage”—the “approximate income needed to meet a family's basic needs”—is $15.12.” In the next paragraph, it adds, “Likely contributing to this wage gap, according to a study by two Princeton economists, are no-poach provisions in franchise agreements which prohibit one shop owner from offering work to employees of another shop owner.”

The Princeton study has nothing to do with Jiffy Lube itself, but it does say that no-poach provisions can “significantly influence pay” by keeping franchise owners from competing for the best workers. 

Another study from a professor at the University Law School found that “"[w]hen a franchisor requires the different franchisees within its chain not to poach each other's workers ... the no-poaching agreement is anticompetitive, and will tend to suppress the wages of workers.”

Although some states have laws prohibiting non-compete clauses in employment agreements, companies sometimes get around this by putting no-poach clauses in franchising agreements. 

According to the complaint, courts are beginning to recognize the effect of these agreements. In June 2018, for example, a court upheld a federal antitrust claim against McDonald’s involving a no-poach clause in its franchise agreements. The complaint quotes the court’s opinion as saying, “Even a person with a rudimentary understanding of economics would understand that if McDonald’s franchises do not compete with each other for workers, wages would stagnate.” A similar ruling was reached about no-poach clauses in franchise agreements for Jimmy John. 

The complaint quotes the Jiffy Lube franchise agreement as saying, “Franchisee will not employ or seek to employ any person who is or within the preceding six months has been an employee of Franchisor or of any System franchisee of Franchisor, either directly or indirectly, for itself or through, on behalf of, or in conjunction with any person.”

However, the complaint says that the agreement also states that the franchisee is an independent contractor and that “Franchisee’s business is totally separate from Franchisor.”

The complaint claims that antitrust laws prohibit the kind of anticompetitive behavior that no-poach clauses represent. It cites the Clayton and Sherman Acts in federal law as prohibiting this kind of prohibition. 

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