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McDonald’s No Poaching of Employees Antitrust Class Action

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This class action is another antitrust lawsuit brought because of a fast food company’s “no-poach” policy of refusing to let franchisees compete for each other’s workers. The defendants this time are McDonald’s USA, LLC and McDonald’s Corporation.

The class for this action is all persons in the US who are current or former employees or managers at all McDonald’s restaurants, whether operated by McDonald’s itself or by a McDonald’s franchisee.

The complaint alleges that McDonald’s and its franchisees agreed not to recruit or hire each other’s workers. This was enforced, at least in part, via an explicit provision forbidding this practice that was included in the standard McDonald’s franchise agreement, at least up until 2017, the complaint says: “The practice at issue reflects a naked horizontal restraint of competition in the form of a market allocation agreement, a category of restraint long held to be per se unlawful under the antitrust laws.”

In fact, the Department of Justice Antitrust Division and Federal Trade Commission’s joint 2016 Antitrust Guidance for Human Resource Professionals says, “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.” This is because companies with similar businesses compete with each other to hire or retain the best workers, and competitors are not allowed to agree not to compete.

The Washington Attorney General found in July 2018 that McDonald’s no-poach agreement restrains trade in that it “restricts worker mobility and decrease[s] competition for labor by preventing workers from moving among the chain[]’s franchise locations.” It thus puts “downward pressure on wages.”

The agreements were “especially harmful to employees of McDonald’s and its franchises as those employees are usually paid below a living wage, and their marketable skills … primarily have value only to other McDonald’s restaurants and do not transfer to other fast food restaurants or similar businesses.”

The complaint seeks to demonstrate that McDonald’s has little respect for workers and their financial needs. “McResource, the McDonald’s intranet website, advised employees to break their food into smaller pieces to feel fuller, seek refunds for unopened holiday purchases, sell possessions online for quick cash, and to ‘quit complaining’ as ‘stress hormone levels rise by 15 percent after ten minutes of complaining.’”

In July 2018, McDonald’s agreed to an Assurance of Discontinuance, whereby it would stop requiring or enforcing the no-poach agreements. The complaint alleges the company has been violating the Sherman Act, a federal antitrust law.

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