8 Fast-Food Chains Will End ‘No-Poach’ Policies

8 Fast-Food Chains Will End ‘No-Poach’ Policies

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Eight more restaurant chains have agreed to end a policy that blocks workers from switching jobs within the individual brands, becoming the latest companies to curtail a once-prevalent hiring practice that critics say depressed wages for some of America’s lowest-paid employees.

As part of agreements with the Washington State attorney general’s office on Monday, Applebee’s, Church’s Chicken, Five Guys, IHOP, Jamba Juice, Little Caesars, Panera Bread and Sonic all agreed to remove a so-called no-poach clause from their contracts with franchisees.

The clauses prohibit a cashier at one Panera location, for example, from working at another Panera location.

Such restrictions are not unique to the restaurant industry, but until recently they were ubiquitous, particularly among fast-food chains. That began to change last year, after two prominent economists at Princeton produced a report that focused on how no-poach clauses could lock workers into low-wage jobs.

Unlike noncompete clauses, which employees are made aware of, people who work for fast-food companies might have no idea that they are limited in where they may work. No-poach restrictions are buried in thick contracts between corporate headquarters and franchisees, who collectively operate most of the major fast-food restaurants in the United States.

The study, by the Princeton economists Alan Krueger and Orley Ashenfelter, estimated that the restrictions affected 70,000 individual restaurants in the United States, roughly a quarter of all fast-food locations. Their report examined franchise contracts at 40 companies, and concluded that the no-poach agreements appeared to exist mainly to limit competition and turnover.

Franchisees and other defenders of the practice argue that no-poach rules protect the time and money employers invest in hiring and training. But critics have argued that the restrictions also keep them from offering raises, since companies know that their workers are limited when it comes to taking new jobs.

The attorney general’s office said that Little Caesars largely removed no-poach clauses from its contracts last year, and that Applebee’s, IHOP and Jamba Juice ended the practice after Mr. Ferguson started the investigation. The agreements announced on Monday make the commitments to end the practice legally binding.

Separately, attorneys general in 10 states have also begun their own investigation into no-poach agreements within the restaurant industry.

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