"Non-compete clauses are common among professionals, justified by a variety of innocuous-sounding and apparently reasonable business reasons," writes Slashdot reader Beeftopia. "This story shows that, surprisingly, it is a very effective wage suppression mechanism as well, used in industries where it would seem unnecessary."
For many years, fast-food franchises agreed not to recruit or hire one another's workers within the same chain. These "no-poach agreements," as they are known, meant a worker couldn't get better pay or move up the ladder by going to another franchise. Bob Ferguson, Washington's attorney general, said such agreements are clearly illegal. "These no-poach clauses, I think, are an example of a rigged system," he said. "I think you're a worker, you have no idea this clause exists, you haven't signed it. And yet when you try to go to another business to improve your wages, you can't do it, because of this condition in a contract that you never signed..."
Princeton economist Alan Krueger says such restrictions make the labor market work inefficiently, keeping wages artificially low. "I think it's very hard to come up with a sound business justification for this practice, other than reducing competition for workers," he says.
Arby's, Carl's Jr., and five other fast food chains agreed "under pressure" to stop enforcing their non-compete agreements, while eight more chains are currently being investigated by a coalition of 11 state attorney generals. Massachusetts Attorney General Maura Healey reports that 80% of fast food workers are currently locked into non-compete agreements, according to Food & Wine magazine.
"Though a statement from the International Franchise Association argues that these agreements are necessary to keep employees from jumping ship before the expense to train them has been recouped, opponents of these clauses suggest the industrywide benefit of suppressing wages may be the real driving factor."
Read more of this story at Slashdot.