Attorney Generals from eleven states have launched investigations into contracts for workers at fast-food chains, which prevent them from changing franchises, targeting a practice that some economists believe drags wages down for millions of people in the United States.
The AGs are sending letters out to eight different fast-food companies that include Dunkin’ Donuts, Burger Kings, Wendy’s and Panera. The letters will request information related to the agreement of ‘no-poaching” that prevent managers from hiring employees at other stores in the same fast food chain.
The agreements, said Maura Healy the Attorney General in Massachusetts, unfairly limit freedoms of fast food workers as well as other workers earning lower wages, to earn more and seek promotions.
Clauses of no-poaching have received much more intense scrutiny by Democrats as well as policy experts the last several years due to wage growth continuing to be a weakness for what is an economy that is otherwise strong and expanding.
Economists have said that barring employees from making changing between locations in the same chain is unfairly preventing them from being able to negotiate for better wages, while businesses claim they need the agreements in place for local companies to recoup costs of investing in personnel.
Pennsylvania AG Josh Shapiro said that many workers do not learn of the agreements until they are denied an opportunity to advance into a better position, earn more or obtain schedules that are family friendly at different locations in the same franchise.
In March, two senators Elizabeth Warren and Cory Booker, both Democrats, introduced legislation that would make no-poaching agreements illegal, saying that they were anti-competitive.
A policy aide with Booker said an estimated 70,000 restaurants in the fast-food industry would be affected by the legislation, which continues to go nowhere in a Congress controlled by the Republicans.
The antitrust division of the Department of Justice opened its own inquiry of the same practice.
Approximately 80% of workers in fast-food are held back by the no-poaching clauses, said one AG’s office. Other chains that have been targeted by the state Attorney Generals are Five Guys Burgers, Arby’s, Popeyes Louisiana Kitchen and Little Caesars.
Advocates of the fast-food industry maintain that the practice is needed to protect their investments.
Often times employees in the fast-food industry sign contracts without knowing provisions are in them limiting them from moving to other stores within the chain.