State Attorney General Bob Ferguson on Monday filed a lawsuit against national restaurant chain Jersey Mike’s after it refused to remove no-poach clauses from its franchise contracts.
In order to avoid a lawsuit from Ferguson, seven more corporations committed to eliminate the use of no-poach clauses nationwide ― Anytime Fitness, Baskin Robbins, Circle K, Domino’s, Firehouse Subs, Planet Fitness and Valvoline.
No-poach clauses appear in franchise agreements between owners of fast-food franchises and corporate headquarters. The clauses prohibit employees from moving among restaurants of the same corporate chain, a practice that economists believe stagnates wages.
With Monday’s announcement, 30 chains have now signed legally enforceable agreements with the state Attorney General’s Office to remove no-poach clauses from franchise contracts since Ferguson began his initiative to eliminate no-poach clauses nationwide. These 30 corporations are removing no-poach clauses from franchise contracts at more than 85,000 locations.
Monday’s action extends Ferguson’s initiative beyond fast-food chains for the first time. Anytime Fitness, Circle K, Planet Fitness and Valvoline are the first non-restaurant chains to sign legally binding agreements to eliminate no-poach clauses.
With Monday’s announcement, Ferguson also moves closer to his goal of eliminating no-poach clauses in the fast-food industry nationwide. Jersey Mike’s is one of two remaining fast-food chains in Washington at which the Attorney General’s investigation uncovered the use of no-poach clauses in franchise contracts. Quiznos is the remaining fast-food chain of which the Attorney General’s Office is aware in Washington.
Jersey Mike’s is the first corporation Ferguson or any other state attorney general has sued for using no-poach clauses.
“No-poach clauses are an example of a rigged system that illegally harms workers,” Ferguson said. “My goal is straightforward – eliminate them nationwide. Like Jersey Mike’s, corporations that refuse to eliminate no-poach clauses can expect a lawsuit from my office.”
Lawsuit against Jersey Mike’s
Ferguson’s lawsuit, filed in King County Superior Court on Monday, asserts that Jersey Mike’s violated antitrust provisions of the state Consumer Protection Act for years through its use of no-poach clauses to restrict competition for labor.
Ferguson asks the court to order Jersey Mike’s to stop using no-poach clauses in current and future contracts at its 38 locations in Washington state and more than 1,300 locations nationwide. Jersey Mike’s could face civil penalties up to $500,000 for the violation. The Attorney General’s Office will also seek to recover its costs and fees for having to bring the litigation.
Ferguson offered Jersey Mike’s the opportunity to avoid a lawsuit without paying any money at all, either in penalties, restitution, costs or any other purpose. To avoid a lawsuit, Jersey Mike’s needed to sign a legally enforceable commitment to eliminate its no-poach clauses in franchise contracts nationwide – the same terms accepted by 30 corporations and counting. Jersey Mike’s refused Ferguson’s offer.
