Local franchises agree to AG Fergusons’ no-poach commitment

Jersey Mike’s is the target of AG’s only lawsuit around the practice.

Four new corporate chains agreed to legally binding commitments to eliminate no-poach clauses nationwide, adhering to a push made by Attorney General Bob Ferguson to remove the practice from Washington. The group includes Bonefish Grill, a restaurant with a location in Bothell.

The others are Carrabba’s Italian Grill, Management Recruiters International and Outback Steakhouse. Cumulatively, the chains have 24 locations in the state and 1,600 franchises in the U.S.

No-poach clauses typically appear in franchise agreements between owners of franchises and corporate headquarters. In them employees are prohibited from seeking employment at other stores in the same chain — a practice normally done to increase wages.

So far 50 corporate chains have signed the agreements, promising to remove any current clause and not to enact any new similar policies.

Jersey Mike’s, a sandwich chain with locations throughout western Washington, who refused to Ferguson’s demands, is the only company to be sued by Ferguson so far.

The lawsuit, filed in King County Superior Court in October 2018, asserts the business violated antitrust provisions of the state Consumer Protection Act for years, due to its no-poach clauses that allegedly restricts competition for labor.

Ferguson, in the lawsuit, asked the court to step in and order Jersey Mike’s to stop the practice by removing the no-poach clauses from contracts, current and future, in all of their 1,300 locations nationwide.

In a statement Wednesday, the company said they had “removed all no-poach provisions from its Franchise Disclosure Documents in April 2018 and no-poach provisions have been removed from all Franchise Agreements in the state of Washington.”

“No-poach clauses create a rigged system where workers lose,” Ferguson said in a release. “Thanks to my excellent legal team, 50 large corporations and counting have eliminated no-poach clauses nationwide to avoid a lawsuit from my office. This impacts more than 100,000 locations and benefits millions of workers.”

In January 2018, Ferguson’s Antitrust Division launched a no-poach clause investigation. Last September he expanded his query into industries outside of fast-food chains. Since beginning the investigation, the division has successfully negotiated the elimination of no-poach clauses at 50 companies in the U.S.

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