The dreaded non-compete. The clause that is included in many employment contracts that controls employees’ work behavior once they leave their current employer. To be enforceable, these provisions almost always require a time restriction— the employee cannot engage in their line of work for a set amount of time—and a geographic restriction—the employee cannot engage in their line of work within a certain radius of their former employer.
They make sense in certain instances. Let’s say a company has spent years of research and development creating a new “thing.” Then, after investing time, money, and energy into this new “thing,” one employee goes to a direct competitor and tells them everything. Situations like this are what non-competes are designed to avoid.
But non-competes show up in less high-stakes situations. For example, in recent years, many fast food chains have taken to including a non-compete in workers’ contracts. The intent here is not so much that Burger King is afraid of the Whopper recipe getting out (just check the internet for a host of proposed recipes posted by disgruntled former cashiers). Rather, they don’t want to invest the time and energy it takes to hire and train a new employee if that employee is going to quit after two weeks. The employee not being able to find work in a similar field operates as a deterrent to quitting, thus makes the employee more “valuable,” and an investment in training more worthwhile, to a Burger King.
But many feel that these non-competes are restricting fast food workers, who are already subject to low wages and poor working conditions. Their inability to pursue a better-paying position at a competing chain allows their employer to keep their salary artificially low. Employees may feel trapped in their current position and put up with lower salaries, or a difficult commute, or a lower-ranking position because they fear that they will not be able to find or obtain employment if they leave their post.
Well now attorneys general from 10 states and the District of Columbia are fighting back on behalf of fast food workers. While Delaware is not one of the states pursuing this, all of our neighbors (Pennsylvania, New Jersey, and Maryland) have joined the action, along with Massachusetts, Illinois, California, Minnesota, New York, Oregon, and Rhode Island.
In a statement released by New Jersey’s Attorney General Grewal, he said he and the other 10 attorneys general are requesting documents and information relating to “non-poach” and non-compete clauses from Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Wendy’s, Arby’s, Popeyes Louisiana Chicken and Panera Bread. “In the fast food industry, no-poach agreements can limit a worker’s future job prospects and restrict his or her earning potential, which is not only unfair to the worker but can harm the state’s economy,” Attorney General Grewal said. The statement also included input from Labor Commissioner Robert Asaro-Angelo who said:
“Workers who live in a Democracy should be free to change jobs. Non-poaching agreements, which are becoming more common, can block workers from being considered for jobs that pay better, move them up the ladder, or are located closer to home – the traditional reasons people look for a new job. These agreements can exploit low-wage workers who are most in need of job protections.”
In mid-July seven national fast food chains made a deal to start eliminating these clauses from future contracts. Arby’s, Carl’s Jr., McDonald’s, Jimmy Johns, Auntie Anne’s, Buffalo Wild Wings, and Cinnabon have stuck an agreement in Washington State to remove non-compete clauses from new and renewed contracts. While the agreement was made in Washington, it will extend nationwide in these chains. This is a promising trend for opponents of non-competes.
The companies targeted by the attorneys general’s action have until August 6 to send the requested documents.