New Jersey reaches no-poaching agreement with four fast food companies

New Jersey Attorney General Gurbir Grewal has announced that New Jersey has entered into a multi-state accord with Arby's, Little Caesar's, Five Guys and Dunkin' Brands with each company agreeing to no longer use no-poach contracts, which prevent workers from transferring to another franchise within the chain.

The agreements follow a multi-state investigation launched in July of 2018 over concerns no-poach agreements were harming low-wage workers because it limited their ability to get better paying jobs.

A July 2017 study had found that 80 percent of fast food restaurants use no-poach provisions to bind their employees.

“Convincing four major fast food companies to stop restricting their employees’ job options matters, not just for these workers, but for New Jersey’s economy,” Attorney General Grewal said. “No-poach contracts can restrict a worker’s future prospects, limiting his or her career mobility and earning potential. I am glad that Arby’s, Little Caesar, Five Guys and Dunkin’ now recognize the unfairness of no-poach agreements and will stop using them, and I am proud of the multistate investigation that led to their change of heart. We urge other fast-food companies to follow their example.”

Under the settlements, Arby's, Little Caesar's, Five Guys and Dunkin' Brands have agreed to stop including no-poach provisions in any of their franchise agreements and to stop enforcing any franchise agreements already in place.

They've also agreed to amend existing franchise agreements to remove no-poach provisions and to ask their franchisees to post notices in all locations to inform employees of the settlement.

Arby's, Little Caesar's, Five Guys and Dunkin' Brands will also notify the participating Attorneys General if one of their franchisees tries to restrict any employee from moving to another location under an existing no-poach provision.

New Jersey, Massachusetts and the other participating states began their investigation last July by sending letters to eight national fast-food franchisers: Arby’s, Burger King, Dunkin’ Brands, Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen and Wendy’s.

Inside those letters, Attorney General Grewal and the other Attorney General's expressed concern about “the potentially harmful impacts” of imposing no-poach requirements on fast-food workers.

Among other concerns, the multi-state letters alleged that no-poach provisions make it difficult for workers to improve their earning potential by moving from an existing job at one franchise location to a more challenging and/or higher-paying position at another franchise location.

The letters also noted that many fast-food workers aren’t even aware they they’re subject to these no-poach provisions.

Since the investigation began, Wendy’s announced that it will no longer use no-poach provisions in their contracts with franchisees.

Investigations into Burger King, Popeye's, and Panera are ongoing at this time.

In addition to New Jersey and Massachusetts, the coalition includes the Attorney General's of California, the District of Columbia, Iowa, Illinois, Maryland, Minnesota, North Carolina, New York, Oregon, Pennsylvania, Rhode Island and Vermont.

“No-poach agreements commonly used in the fast-food industry unfairly bind workers to one employer by blocking them from seeking better-paying, more attractive jobs with competitors,” New Jersey Labor Commissioner Robert Asaro-Angelo said, “Today’s agreement is a victory for workers’ rights and a big step toward ending this exploitative practice.”

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