Dive Brief:
- The U.S. Court of Appeals for the Seventh Circuit ruled on Friday that a lawsuit alleging that a no-poach clause in McDonald’s franchise agreements was in violation of antitrust laws be remanded to trial court.
- In the lawsuit, Deslandes v. McDonald's USA LLC, employees said the no-poach clause, which prevented McDonald’s franchise operators from hiring anyone working for McDonald’s or another franchise until six months after the employee’s last day, because it suppresses wages for fast food workers through decreased competition.
- The U.S. District Court for the Northern District of Illinois, Eastern Division, had denied classifying the case as a class-action lawsuit, but the Seventh Circuit said it may be “wise to reconsider in light of the need for a remand.”
Dive Insight:
The federal government has been pursuing antitrust legislation and focusing on no-poach agreements to increase workplace competition for employees. In January, the Federal Trade Commission released a proposed rule that would ban companies from requiring non-compete agreements for new hires and would force employers to rescind existing agreements.
“Non-competes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand,” FTC Chair Lina Khan said at the time.
In a May memo, National Labor Relations Board General Counsel Jennifer Abruzzo said non-compete provisions are in violation of the National Labor Relations Act and affect workers’ ability to resign or look for a job with a local competitor to improve working conditions.
