On Thursday May 2, 2019 the American Antitrust Institute submitted a thirteen-page letter to the Antitrust Division of the Department of Justice expressing concerns that the DOJ’s recent Statement of Interest relating to fast food franchise employee “no-poach” cases “threatens to lead district courts astray and discourage antitrust challenges to patently anticompetitive labor-market restraints that exploit the most vulnerable workers in the franchise sector.” The Antitrust Institute, along with many other employee rights organizations and advocates, contends that the practice of restricting employees from moving from one store to another within the same franchise violates antitrust laws and causes workers’ wages to be lower than they would otherwise be if not limited by the resulting reductions in career mobility and advancement.

The AAI’s letter was written to “clarify that AAI disagrees with interpretations of the law offered in the [DOJ’s] Statement of Interest … and to explain the basis for our belief that the Division’s approach to franchise no-poaching cases is unsound.” No-poach agreements were the subject of recent consolidated private antitrust class actions filed in the Eastern District of Washington. In response to the lawsuits, the DOJ filed a Statement of Interest in the matter asserting its interest in what it takes to be the correct application of federal antitrust laws.

Many “no poach” restriction agreement cases relate to the movement of employees between different companies. The recent franchise cases raise the issue of “vertical” no poach restrictions, where a single company imposes barriers to employees changing stores or roles even while remaining at the same company. The DOJ sought to treat such cases differently, making allowances for the restrictions that the AAI and other advocates feel are based on immaterial differences that arise when two or more companies agree to restrict employee mobility versus the situation where a single company (like fast food franchising corporations) seeks to restrict its employees mobility and compensation between different franchises within the company.

The AAI’s full letter to the DOJ can be read here.

Lieff Cabraser’s Work for Employees in No-Poach Cases

Lieff Cabraser represents plaintiff employees fighting against improper mobility restrictions and pay suppression implemented by illegal “no-poach” agreements across a wide range of industries including rail workers, university academics, high-tech workers, and fast food franchisees. Our work in the landmark High-Tech Employee Antitrust case against industry giants including Apple, Adobe, Intel, and Google resulted in a $435 million settlement on behalf of employees that stands as the largest resolution in history of antitrust claims in the employment setting, on either an aggregate or per-class-member basis. Learn more about our  no-poach cases.

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