Good news for low-wage workers in Washington State: seven fast food chains recently reached a deal with the state attorney general to drop no-poach clauses from their contracts.
The agreement to end no-poach clauses covers seven chains: McDonald’s, Arby’s, Carl’s Junior, Jimmy John’s, Auntie Anne’s, Buffalo Wild Wings and Cinnabon. In addition to removing this provisions in-state, the chains have pledged not to enforce them at their franchises nationwide.
“My goal is to eliminate these provisions in all fast-food contracts in my state,” said Bob Ferguson, attorney general in Washington, in an interview with The New York Times.
Many fast food chains have clauses in their contracts that forbid franchises from hiring employees who work for other franchises in the same corporate family. So, while a worker at Burger Chain A might be able to jump ship for Burger Chain B, they wouldn’t be able to leave a job at one Burger Chain A restaurant and go to another. This becomes a problem when a worker can’t get enough hours at their current employer but can’t leave.
The provisions are typically included in the contracts between corporate and franchisees. Workers may never see the agreements … until they attempt to change jobs.
How No-Poach Clauses Keep Wages Down
An earlier Times article drew Ferguson’s attention to the impact of no-poach clauses on low-wage fast-food workers:
The fast-food industry has been one of the biggest sources of job growth since the recession. More than 4.3 million people are now dipping fryer baskets and flipping hamburgers, a 28 percent increase since 2010 that is almost double the increase in the overall labor market, according to the most recent data from the Bureau of Labor Statistics.
But the average fast-food worker takes home just $300 a week before taxes, about a third of what the average private sector worker earns.
But, low hourly wages are only part of the story. Fast food workers often find themselves unable to get full-time hours at their employer. No-poach clauses prevent workers from changing jobs and moving to a franchise with more availability.
Because fast food chains employ such a large segment of the U.S. workforce, their hiring practices could conceivably keep wages down across the country. In fact, some economists have argued that wage stagnation since the recession is due in part to fewer employers overall. Fewer employers equals less competition for labor, which means workers forced to take what they can get.
According to The PayScale Index, wages declined 0.9 percent between Q1 and Q2 2018. With inflation, real wages are have dropped 9.3 percent since 2006.
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