SACRAMENTO – California Attorney General Xavier Becerra today announced that his office, as part of a multistate effort, secured a settlement with three major fast food companies that ends the use of “no-poach” policies. These anticompetitive provisions harm workers by contractually preventing franchise operators from hiring or recruiting the employees of another franchise operator. This artificially reduces competition for labor and makes it more difficult for employees, many of whom are low-wage workers, to seek better pay and benefits at competing franchises. Workers are often unaware of the existence of these provisions. As a result of the settlements, Burger King, Popeyes, and Tim Hortons will no longer include no-poach provisions in any of their franchise agreements in the United States.
“Anti-competitive behavior intended to depress wages has no place in our markets,” said Attorney General Becerra. “The settlement announced today will help protect workers and competition. In California, we’ll continue to do our part to make sure our economy works for everyone.”
“No-poach” provisions have been commonplace in many fast food outlet franchise agreements. These provisions are also known as “no-solicitation,” “no-hire,” or “no-switching” agreements. Ultimately, contracts that contain these provisions restrict a franchisee’s ability to recruit or hire employees from another franchise and significantly restrict an employee’s ability to seek new work and earn higher wages. The agreements announced today are all with chains operated by Restaurant Brands International (RBI), which, according to RBI, operates approximately 26,000 restaurants in more than 100 countries and U.S. territories.
These settlements are part of Attorney General Becerra’s broader efforts to defend workers in California and across the country. Last year, Attorney General Becerra joined multistate settlements with Arby’s, Dunkin’, Five Guys, and Little Caesars to remove “no-poach” provisions from their franchise agreements. The Attorney General also called for a nationwide ban on non-compete agreements and reminded businesses that non-compete provisions are unenforceable in California. Earlier this year, Attorney General Becerra filed an amicus brief in defense of California’s labor laws and airline flight attendants. In 2018, Attorney General Becerra co-led a coalition of 17 attorneys general opposing a Trump Administration rule to allow employers to pocket the tips of certain employees, threatening the loss of up to $5.8 billion of workers’ earned tips.
In securing the settlements, Attorney General Becerra joins the attorneys general of Massachusetts, Illinois, Iowa, Maryland, Minnesota, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, and the District of Columbia.
The Burger King settlement is available here.
The Popeyes settlement is available here.
The Tim Hortons settlement is available here.