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Arby’s No-Poach Franchise Agreements in Colorado Class Action

This is another among many antitrust class actions being brought against fast food companies for the no-poach clauses in their franchise agreements. As in other cases, the complaint alleges that the clauses are anticompetitive and keep wages low.

The class for this action is all persons employed by AMAC, United States Beef Corporation, Arby’s Franchisor, or any of the ten largest franchises of Arby’s in Colorado at any time, from July 12, 2014 through the conclusion of this action.

The case is brought by plaintiffs who worked at two Arby’s franchises; the defendants are the two franchisees, AMAC, Inc. and United States Beef Corporation, and Arby’s Franchisor, LLC.

Arby’s franchise agreements are quoted by the complaint. They contain clauses that specify that during the course of the agreement and for twelve months afterwards, “neither Licensee, nor any Guarantor, nor any general partner of Licensee … nor any shareholder, limited partner, member or other equity owner holding at least fifteen percent (15%) interest in Licensee, shall … solicit or attempt to solicit any officer, employee or independent contractor or Arby’s or its affiliates or of any Arby’s licensee in the Arby’s system to terminate or reduce his or her employment or business relationship with Arby’s or its affiliates or with such Arby’s licensee and shall not assist any other person or entity in such solicitation.”

The complaint alleges that this no-poach clause is a per se violation of both the federal Sherman Antitrust Act and the Colorado Antitrust Act of 1992. It was discovered in 2018 when the Washington State Attorney General investigated some of the largest fast food companies in that state, including Arby’s. Naturally, large fast food companies operate in more than one state, so this discovery has implications for franchisors and franchisees in other states.

As the complaint says, “Non-solicitation agreements restrict worker mobility, which prevents low-wage workers from being solicited and obtaining higher pay. This artificially suppresses fast food worker wages.” The complaint claims that “Defendants conspired not to actively solicit each other’s employees and workers as part of one overarching conspiracy to suppress the compensation” of their employees and workers.

The complaint explains that “active recruitment by rival employers … often include enticing offers that exceed an employee’s wages, salary, and/or benefits, thereby incentivizing the employee to leave his or her current employment in order to receive greater compensation for his or her labor, or alternatively, allowing the employee to negotiate increased compensation from his or her current employer.” 

Other workers hear about the better offers, and this may also lead to a movement for better compensation. Employers also learn whether their compensation is adequate to retain their employees, and they may be forced to raise wages or increase benefits to keep their best workers. No-poach agreements, by preventing competition for workers, keep wages low.

Article Type: Lawsuit
Topic: Antitrust

Most Recent Case Event

Arby’s No-Poach Franchise Agreements in Colorado Complaint

January 15, 2019

This is another among many antitrust class actions being brought against fast food companies for the no-poach clauses in their franchise agreements. As in other cases, the complaint alleges that the clauses are anticompetitive and keep wages low.

arbys_no-poach_agreements_compl.pdf

Case Event History

Arby’s No-Poach Franchise Agreements in Colorado Complaint

January 15, 2019

This is another among many antitrust class actions being brought against fast food companies for the no-poach clauses in their franchise agreements. As in other cases, the complaint alleges that the clauses are anticompetitive and keep wages low.

arbys_no-poach_agreements_compl.pdf
Tags: Antitrust, No-Poach Agreements