On Friday, August 25, the US Court of Appeals for the Seventh Circuit (“7th Circuit Court”) decided to revive a lawsuit alleging that a no-poach clause in McDonald’s franchise agreements violates federal anti-trust laws that had been dismissed by the trial court.
No-Poach Clauses in Franchise Agreements
In the lawsuit, Deslandes v. McDonald’s USA, LLC, former employees said that the no-poach clause in the franchise agreements, 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, violated federal anti-trust laws because it suppressed wages for fast food workers through decreased competition.
Previously, the US District Court for the Northern District of Illinois, Eastern Division, had denied classifying the case as a class-action lawsuit and dismissed the plaintiffs’ complaint. However, upon appeal, the 7th Circuit Court stated that it may be “wise to reconsider [class certification] in light of the need for a remand.”
Increased Workplace Competition
The federal government has been pursuing anti-trust legislation and focusing on increasing workplace competition for employees by proposing changes on the legality of non-solicitation agreements. Earlier in January of this year, the Federal Trade Commission (“FTC”) published a proposed rule that would ban employers from imposing non-compete clauses with employees. Public comment on the proposed rule was extended until April 19, 2023. It is expected that the FTC will vote on the final version of the proposed rule in April next year.
For more information on employee non-compete, non-solicitation, and no-poach agreements, please contact us at info@mnklawyers.com.
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