Intra-Franchise No-Poach Agreements: Recent Developments and Trends

Washington Attorney General Bob Ferguson has obtained binding settlement agreements from 23 prominent franchisors in the nine months since he announced an initiative to eliminate no-poach clauses nationwide, and he has already expanded beyond the fast-food industry.

Scrutiny of the clauses, which generally prevent employees from moving from one company franchise to another, is building nationwide: A coalition of Attorneys General from 11 other states and the U.S. Department of Justice have targeted franchisors throughout 2018 on the basis that the clauses violate state and federal antitrust laws. Several of these public enforcement actions have prompted follow-on private class-action lawsuits, leading employers nationwide to re-evaluate their practices to avoid harsh civil penalties and even criminal prosecution.

Originally published in Bloomberg Law; reprinted with permission.