The U.S. Court of Appeals for the 7th Circuit ruled Aug. 25 that a lawsuit alleging McDonald's barred franchisees from hiring current McDonald's employees be reconsidered in district court.
The decision allows two former employees to proceed with a proposed class action alleging the no-poaching provision in franchisee contracts violated federal antitrust law by suppressing wages through decreased competition and prevented workers from moving to higher-paying jobs at other McDonald's locations.
We've rounded up articles from SHRM Online and other outlets to provide more context on the news.
Case History
A McDonald's manager first brought her class-action antitrust suit against the restaurant chain in 2017 after she had to decline a higher-paid job at another McDonald's franchise because of the company's anti-poaching agreements. McDonald's franchise operators were prevented from hiring anyone working for McDonald's or another franchise until six months after the employee's last day.
The fast-food giant claimed that the agreements were necessary to prevent franchisees from stealing each other's employees and curb the loss of training costs, in addition to improving consistency and quality. McDonald's has clarified that it stopped requiring franchisees to sign the anti-poaching agreements in 2017.
The U.S. District Court for the Northern District of Illinois granted summary judgment to McDonald's in 2022, finding that the presence of dozens of other fast-food restaurants in the local area meant that McDonald's didn't have the market power to prevent the plaintiffs from seeking work at other, better-paying restaurant chains.
(Courthouse News Service)
Court Dismisses DOJ Case Targeting No-Poach Agreement
The U.S. District Court for the District of Connecticut dismissed an antitrust case in April, providing some reassurance to HR professionals and employers that use no-poach agreements.
(SHRM Online)
SHRM Supports No-Poach Agreements in Some Cases
While the federal government has been ramping up enforcement of antitrust laws, SHRM warned that completely banning all no-poach agreements would be detrimental to companies and HR professionals.
(SHRM Online)
Canada Prohibits Wage-Fixing, No-Poach Agreements
In June 2023, the Canadian government outlawed wage-fixing and no-poaching agreements between employers concerning wages, work conditions and hiring practices.
(SHRM Online)