Eric A. Posner's Research on Franchise 'No-Poaching' Clauses Prompts Investigation
Illinois, 10 other states take aim at 'no-poaching' clauses that critics say limit fast-food workers' pay
Illinois and 10 other states are investigating hiring practices that critics say prohibit minimum wage workers from seeking better positions or pay at different fast-food franchises within the same restaurant chains.
In an effort led by Massachusetts Attorney General Maura Healey, the attorneys general from 11 states sent a letter Monday to eight fast-food chains, asking them to provide documents, including copies of franchise agreements and communications related to “no-poaching” provisions, by Aug. 6. The chains are Arby’s, Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Panera Bread, Popeyes Louisiana Kitchen and Wendy’s.
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The investigation by the attorneys general was prompted by a February study from economist Alan Krueger of Princeton University and Eric Posner of the University of Chicago Law School that showed a nearly 50 percent increase in the use of no-poaching clauses among major franchisers in the past two decades.
“These contractual devices give the employers more power to suppress wages,” Posner said. “Despite the booming labor market, there hasn’t been an increase in wages as you’d expect.”
“One thing people don’t understand is when employers complain they can’t fill vacancies, what they’re really saying is they’re not willing to raise wages to a level that would attract people,” he added.
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