Burger King affiliates must face antitrust litigation over a former “no hire” pact that barred the fast food giant and its franchise locations from recruiting one another’s workers, a federal appeals court in Atlanta ruled Wednesday.
The US Court of Appeals for the Eleventh Circuit revived the case, a proposed class action on behalf of former employees. But the court based its decision on relatively narrow grounds, declining to issue a groundbreaking ruling on the proper framework for no-poach cases involving franchise chains.
Learn More: No Poaching Agreements and Antitrust Enforcement
The group of employees initially filed suit against Burger King in October 2018 in federal court in Florida, alleging that Burger King illegally barred its franchisees from hiring another franchisee’s employees, thus hindering job opportunities for employees.
The employees alleged that the no-poach provision in Burger King’s franchise agreement was per se illegal under federal antitrust laws. The employees argued the no-poach provision effectively reduced employees’ bargaining power, which undercut wages.The “no hire” and “no solicitation” rules have been included in standard franchise agreements since at least 2010, according to the suit filed in 2018.
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