Recent Activity on the Franchise ‘No-Poach’ Agreement Front

Litigation over the enforcement of “no poach” agreements continues to evolve.  “No-poach” agreements have been used to promote brand consistency, efficiency and minimize employee turnover, and many franchise agreements of fast-food purveyors include such restrictions.In the summer of 2018, at least ten different states investigated such provisions to, among other things, evaluate whether the no-poach agreements acted to depress wages or have other antitrust implications.  Shortly after the investigation became public, many national franchise chains and other employers agreed not to enforce no-poach agreements of their franchisees and settled with the State of Washington to avoid any enforcement action.

It may or may not be a coincidence that the resolution followed on the heels of the Department of Justice’s settlement of an anti-poaching case among competitors in the railroad parts industry, USA v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation…