The newest obstacle that’s keeping employees from finding better jobs in their own field is a twist on the noncompete agreement.
Where noncompete agreements require employees to sign away their right to work for a company’s competitors, “no-poach” agreements are made between the competitors themselves — particularly franchises operated under the same business model. That’s what’s been happening for some time now in the fast food industry in at least 11 states and Washington D.C.
For example, the owner of one set of Burger King stores might agree with the owner of another set of Burger King stores that they won’t hire employees out of each other’s stores without a release. It may sound like a sound business practice, but that puts the employees at a serious disadvantage.
Without the ability to take what they’ve learned at one restaurant to another in a nearby market, an employee is often effectively prevented from negotiating better wages, a promotion, a better schedule or much of anything else. The restaurant’s owners know that they can’t leave unless they’re willing to take a job with a different company — which usually means starting over and working up the employee ladder all over again. If the employee is also saddled with a noncompete agreement, the employee has to go entirely outside of the restaurant industry to find another job.
Employers see noncompete and no-poach agreements as ways to protect their investment in their employees. They don’t want competitors wearing the same business uniform stealing away their most reliable workers.
Attorneys are already seeking copies of the franchise agreements for a number of well-known restaurants, including Arby’s, Burger King, Dunkin’ Donuts, Wendy’s and Panera Bread, among others. Other companies are already feeling a backlash from aggressive no-poaching practices. McDonald’s employees have already sued over the issue.
Other fields are also starting to see employees fight back. In the tech industry, Google and Apple agreed to a settlement with employees over a similar no-poach agreement.
Noncompete agreements and no-poach agreements do not always serve a legitimate business need and may even violate a worker’s rights. Employers are well-advised to seek legal counsel about the validity of any agreements they’re currently using to stay ahead of the curve.