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Finally, Non-Compete Clauses Eliminated... For Fast Food Workers (npr.org)
"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."
NPR reports: 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."
NPR reports: 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."
"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," - I'd recommend creating a workplace where employees wont want to 'jump ship'. Correct me if I'm wrong, but isn't that part of the competition process?
Clearly since the clauses exist and are apparently being defended something is going on here, but how is that possible? Fast food work is only a couple rungs up from the bottom. I would have guessed that there's no meaningful gains to be had by pursuing lateral mobility. Given the managers are exploited even more than the hourly types, well, I must be ignorant of something.
He's the best, ok? Offer him 11.25..no, 11.50 an hour! He makes the best fries in all of Boston!
Yes, non-compete agreements are definitely the reason fast food workers receive low wages. Without non-competes, we would see an elite class of fast food worker who can market their skills to the highest bidder.
One of the first things you learn in law school is that this kind of non-compete clause is virtually unenforceable in most U.S. jurisdictions as it is unconscionable as a matter of public policy. If you are so unskilled as to only be able to get a fast food job, then a non-compete clause would make it so you couldn't get -any- job.
Unenforceable? For years, it was those fast-food chains that were doing the enforcing by NOT HIRING people with previous fast-food work experience. That's the only "enforcement" a worker really cares about. "Unenforceable" only matters if you can afford to hire a very expensive lawyer.
Also, we're not really talking about traditional non-compete clauses as most people know them, despite the headline. We're talking about clearly illegal collusion between major corporations to suppress already-low worker wages. Calling it a "non-compete clause" is like calling a bank robbery a "third-party withdrawal".
Irony: Agile development has too much intertia to be abandoned now.
Right to Work really has nothing to do about being fired, it simply means that employees cannot be forced to pay union dues.
the economy sucks for workers right now. The unemployment rate is always bogus but the 'gig' economy means millions of people are being counted as working because they drive for Uber just enough to pay rent. They're on borrowed time when their cars break down, but this is considered 'employed'. We've doubled productivity in 40 years while simultaneously outsourcing and bringing in tons of H1-Bs for the high skill jobs we were promised when the factory work shipped overseas. Meanwhile automation is kicking up. I know IT workers who've lost net ops jobs to monitoring software. You can say their job wasn't much if they got replaced, but this is a recent thing that the software was good enough to replace them. Like last year or two. You can thank "AI" for that (I know, I know, it's not a "real" AI, doesn't get them their jobs back).
TL;DR: we need to start redistributing those productivity gains with taxes and social programs or we need to get used to being a second world hell hole ala Flint, Mi.
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Many of these non-compete agreements exist in states that have Right to Work laws. In a right to work state, how can non-compete agreements even be remotely legal!?
It seems ludicrously seld-defeating in the long run. Most fast food joints require a not insignificant amount of training, so if you're targeting your hiring towards those with no experience, sure you can offer a lower wage, but then the training time is extended, so you still end up paying more money, both for the training period and in the time it takes the new worker to ramp up to something approaching normal productivity. In the meantime your customers get pissed off at poor service, and that will hit your sales.
Honestly I wished I lived in an area like that. I'd open a fast food joint, lure away their experienced staff with higher wages and benefits, and while they flounder because of a moronic policy whose only purpose seems to be to suppress wages regardless of the ill effects on every other aspect of the bottom line, I'd have happier and more productive employees and happier customers.
This kind of "keep the wages low" mindset works when unemployment is high and you can abuse your employees with little fear they'll walk. But even in that situation, creating a demoralized workforce will still lower productivity and customer satisfaction, and will likely keep retention low, meaning training costs go up.
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One of the first things you learn in law school is that this kind of non-compete clause is virtually unenforceable in most U.S. jurisdictions as it is unconscionable as a matter of public policy. If you are so unskilled as to only be able to get a fast food job, then a non-compete clause would make it so you couldn't get -any- job.
Dude. You don't get it if you are on the bottom of the food chain. The managers don't give a shit and will hire someone else instead. This was a result of a big mega fast food chain owner to prevent these poor guys from working 2nd or 3rd jobs to support their families and to always be oncall ... uncompensated of course.
You could whine about the evils of socialism like most Americans (assume you are but not everyone is) but unions were formed to prevent this from those who have 0 bargaining power to be fucked over.
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It seems ludicrously seld-defeating in the long run.
In the long run all the competition is seeing the same expense and lowered quality work. There might be someone that comes along that is willing to hire those with experience but unless they have enough shops to hoover up the experienced workers at any significant magnitude then it does little to break the others to do away with this collusion.
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I'm still at a loss if "non-recruitment" agreements are just mutual non-solicitation pacts, or if they are no-hire agreements. I get how the latter is illegal, but not sure how the former would be. (We won't recruit your staff vs if your staff applies we will not offer them a job.)
But, it seems like the courts are referring to both, which can be dangerous.
It seems ludicrously seld-defeating in the long run. Most fast food joints require a not insignificant amount of training, so if you're targeting your hiring towards those with no experience, sure you can offer a lower wage, but then the training time is extended, so you still end up paying more money, both for the training period and in the time it takes the new worker to ramp up to something approaching normal productivity. In the meantime your customers get pissed off at poor service, and that will hit your sales.
Honestly I wished I lived in an area like that. I'd open a fast food joint, lure away their experienced staff with higher wages and benefits, and while they flounder because of a moronic policy whose only purpose seems to be to suppress wages regardless of the ill effects on every other aspect of the bottom line, I'd have happier and more productive employees and happier customers.
This kind of "keep the wages low" mindset works when unemployment is high and you can abuse your employees with little fear they'll walk. But even in that situation, creating a demoralized workforce will still lower productivity and customer satisfaction, and will likely keep retention low, meaning training costs go up.
The big chains will beat you. McDonalds INVENTED automation and lower middle class chef jobs were the first to take the cut with the introductions of franchises. No training needed like you said. Follow pictures of assembly and have metal pans of ingredients and an order to do something repetitively over and over again. If the employee is upset or not as long as he moves his hands fast product comes out in massive numbers. Morale makes no difference. Meat comes pre-marinated. Vegatables come presliced from Mexico. Just load and go as no chefs are needed for great recipes anymore.
Your restaurant will be too expensive, slow, and inefficient as the untrained workers across the street will outproduce you. At Amazon people piss in bottles to meet their quotas and workers hate working there understandably but Amazon keeps going.
The only thing that will stop this is ... gulp ... evil government socialism and unions. Until demand for expensive fast food and a less supply of workers become available owners will abuse their staff and squeeze the most profits for themselves. Why not?
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I got a handy payout after the hi-tech equivalent of this was shut down.
http://fortune.com/2015/09/03/...
Yes, Mr. Krueger. That's why the businesses have them. Businesses are generally against things that make them less profitable.
Nice headline... helps to read the article, though.... to avoid making up shit.
A McDonald's on Gause Blvd can't try to poach workers from the McDonald's on Front Street....
Note that this is NOT about Arby's hiring your expert McDonald's people, it's about another McDonald's hiring them.
As to the legality, I really couldn't say. Depends on whether any two McDonald's are considered part of the same company or not. If not, then it's illegal. If so, then it's probably legal.
"I do not agree with what you say, but I will defend to the death your right to say it"
I can see expensive executives and senior software architects in order to protect IP, trade secrets, and less wages, but fast food workers? Talk about greed and if these poor saps didn't have life as hard as it already is but what to save a few dollars an hour?
Talk about being kicked when you are down.
I suppose this means the minimum wage is below the market demand already and the owners are just finding loop holes to artificially manipulate the supply/demand curve to their benefit.
It's funny these owners in the States are far right wing and are Free Market Absolutist when it benefits them. The minute they offer below what the Free Market will bear they cry uncle and go out of their way with lawyers about how unfair it is.
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is these shenanigans. Another reason is that minimum wage is the floor. I don't make min wage, but I'm clever enough to realize that my wages are effected by the floor. If somebody can't make enough money to live they'll struggle to make more. Many will fail, but a few succeed. Those guys percolate up the economy, displacing workers at increasingly higher tiers until some of the workers they displaced are competing for my wages.
I'd say low minimum wage cost me at least $10k/yr, and I've got coworkers hired post 2008 who lost closer to $20k to it. I'm basing this off wages after economic crash vs wages pre-economic crash and during stronger economies (pre-H1-B Bonanza).
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re-read his post, where he said "it simply means that employees cannot be forced to pay union dues."
he didnt say you cant have unions, he said they cant be forced to pay dues.
i guess this will probably be detrimental to the union in the long run because they will lose a source of funding.
He never said it outlawed unions. It just creates a challange for the unions model. Normally union gets dues from all the employees, then the union pays and sends fancy lawyers to negotiate and force the company to pay people in that position more money, or fix whatever makes the job worse etc.... With right to work basically the people can chose not to join/pay the union. So at first say 75% of them join the union, 25% pass on it. The union does their job well, everyone gets more money, problems are fixed etc... but then people start realizing that the 25% got their cake and ate it too, they got all the benefits of the union's negotiations, without paying the union, as things go on people stop joining the union (as they get all the perks of the negotiations with or without paying)... but now as only 25% are paying union dues... the union can't afford good lawyers etc... The union doesn't have the power to demand higher wages, or better work environment etc... things start getting worse for everyone, inside and outside the union.
This is a splendid example of capitalism working as it should, i.e. downward pressure on workers' pay that directly benefits shareholders. This is the reason rich people buy shares - in order to get richer.
Debate is a form of harassment. Do not question my truth.
I worked at a McD's franchise. They had Manager Trainee's acting as Manager's 100%, just with none of the pay. I would work 60hours one week and 15 hours the next week. No Overtime Pay. They offered me Manager Trainee position, I left. They were sketch in many other ways. But when i lost that next job i tried to get a job at a Corporate McD's, they wouldn't hire me until i got permission from the sketchy franchise. Of course they said no, I lived no where near that franchise, they had no valid reason to say no other than to screw me over for not taking their "promotion offer". So yeah McD corp was Bs for enforcing non-compete clause.
Ummm, this was not collusion between "large corporations". It was between the franchisees of specific chains (for example the owner of a McDonald's franchise on the east side of town would not hire someone who was currently working for a McDonald's franchise on the west side of town owned by someone else). It was still illegal, and the rest of what you wrote is correct.
BTW, it does not appear that a McDonald's franchise owner would not hire someone who worked for a Burger King franchise.
The truth is that all men having power ought to be mistrusted. James Madison
FYI: Difference between no-poach and non-compete agreement.
You need to start attending your cognitive therapy sessions again
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I live in a Right to Work state. We also have unions in this state. So.. you're wrong? At least I think you're wrong. It isn't exactly clear what your point was supposed to be.
I do, too. It means I cannot be required to join the union or pay union dues. That is exactly what the person's point is, and it means that unions in those states have to actually be responsive to the members because they don't have a captive membership.
No, that kind socialism is part of a tired Marxist dialectic: on the left, you have people saying workers are at war with management shooting themselves in the foot, on the right you have the people this article is about, at war with workers, suppressing consumer spending and productivity by fighting free market labor principles while sending mass jobs and wealth to China, all in the name of lowering labor costs. The "left" and "right" of that dialectic are on the same side! The other side is workers developing as free professionals in order to bring a lot to their companies, and companies striving to attract their talents by treating them well, and making sure profits and success are shared.
When someone walks up to you and commands a choice between "right" and "left", the only correct answer is "no".
-The art of programming is the pursuit of absolute simplicity.
but now as only 25% are paying union dues... the union can't afford good lawyers etc... The union doesn't have the power to demand higher wages, or better work environment etc... things start getting worse for everyone, inside and outside the union.
Why doesn't this create pressure in the other direction then? Wouldn't these people who used to be in the union start thinking back to all of this extra stuff that the union got them and join back up, bringing the membership rate back up and recreating the original set of circumstances you've described? The only way that doesn't happen is if the former union workers get to keep more of their money than the union was able to increase their wages in compensation.
Even that's a little pie in the sky though. A union can raise wages as high as they can successfully argue, but it's not the company that ultimately pays the workers. Its the customers who buy the company's products that are really paying those wages. They have no particular loyalty to that company or its workers and will gladly buy from a competitor that offers lower prices. Unions aren't immune to slitting their own throats through greed any more than company management is.
hadn't doubled in the last 40 years while wages stayed the same or declined. When productivity is skyrocketing and wages are declining something is broken. That is precisely why minimum wage exists.
Demand for wages is only going to fall as new automation kicks into high gear. Slave labor wages have kept that mostly at bay in China, but even there Foxconn is starting to replace workers paid with tea & biscuits with robots. We know exactly what a healthy economy looks like. It looks like Sweden, Norway and Germany. Basically democratic socialism. We're rapidly heading for a post-capitalism economy, and we're already at the point where we need to start implementing solutions to distribute productivity gains because the market is not doing it. This is why economists keep going on about how unemployment is 3.8% and wages aren't going up. The honest ones admit that the economy just doesn't need everybody working anymore. The dishonest ones just scratch their heads...
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Money is NOT a commodity. It's a convenient unit of measure used to track the exchange of goods and labor. We've been off the gold standard for a very long time. We had to, our economy was growing to fast for the amount of gold in this world. It was no longer a useful concept.
H1-Bs do hurt, but they're not the only factor. It's naive to assume that everybody at McDonald's is incapable of bettering themselves. Yes, few will make it to my level, but I know damn well some will because _I_ did. I was a pretty laid back guy working a cake walk call center job until I needed more money for my family and picked up some new skills and gunned for new jobs. I didn't do that because I'm overly ambitious, I did it because I needed the money to support my family. I took my hat out of the low end call center ring (where I wasn't making enough to live) and put it into the high end tech support ring (API development, project management and support). Sure, there's 1 less call center employee, but there's 1 more project manager. In that way I've effectively lowered their wages.
A much larger example of this is when women left the home and entered the workforce. They didn't do this for fun or equality. They did it so they could buy nicer houses in nicer neighborhoods where their kids could go to decent schools.
tl;dr. Supply and Demand goes both ways. More labor in a market means lower wages.
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Companies today create a tremendous amount of value and bring in large cashflows. The problem is that the cashflow is not equitably (in many people's minds) distributed. Everyone is working to create that value, from the organizers to the workers.
This is not close to as restrictive as "non-compete" clauses in employee/employer agreements. These clauses (in the cases they are enforceable) typically restrict the employee's right to work for any competitor for some period of time. If enforced, this can make a specialist almost unemployable in some cases. As well, the action will be taken by the ex-employer against the employee -- resulting in the employee incurring legal expenses and, perhaps, requiring her to pay the ex-employer's legal fees as well if she loses the battle.
The agreement in question here is between franchise owners from the same franchisor. As such, it only potentially restricts an employee at one Burger King franchise from working for another Burger King franchise -- that employee is free to work at the other 95%+ of the restaurant jobs in the area that are NOT Burger King franchises. It's an agreement between the franchisees, not the employee and a franchise. As a result, any resulting legal action will not cost the employee legal fees or result in here having to pay the legal fees of the franchisee bringing the legal action in case of a violation.
If one entity owns many franchises (which is not unusual - in fact, one entity may own all the franchises for a particular brand within many miles), the owner is free to have a policy that no store manager is to hire an employee from another one of the owner's franchises unless the applicant has worked at their current store for at least two years. I don't think anyone would argue with that just as they would not argue that a large engineering company can't have a rule that workers can't transfer between groups at their own initiation more than once every two years (such a policy may be unwise, but it certainly is not illegal). If you consider that the franchisor is the owner of the brand, it controls many aspects of the franchisees operations (including cleanliness, consistency of food product, product offerings, employee training, and employee policies) and this is just one more such restriction on employee recruitment so franchise owners don't get screwed by other franchise owners (just as if one franchise was putting out horrible food, it would screw other franchises).
What about a common case where two businesses enter into a relationship for one to sell consulting or contract services to the other? It's very common for the contract to include terms that prohibit the purchaser of these services from poaching the employees of the supplier of the services without the approval of the supplier. Surely no one would argue that's not acceptable. This agreement, like the fast food case, is an agreement between two businesses, not a business and an employee, and doesn't prevent the ex-employee from doing anything or require them to do anything. Both the consultant and the fast food worker are free to apply for jobs at the client of the contracting firm or fast food franchise respectively and accept a job if offered -- they probably won't get hired because the potential employer will probably honor their contract with the other business, but if the potential employer is willing to fight a legal battle, they might make an offer. Note that in small markets and in specialty fields, the contractor/client restriction may narrow an employee's options way more than the fast food restriction does. There may be only three companies within 100 miles that need aeronautical engineers on permanent staff and if an aeronautical engineer ends up working for a job shop that places them into one of these three companies, 1/3 of the employee's future employment options (at least in the near term) have just vaporized. It's quite rare that 1/3 of the fast food jobs in an area with at least three fast food outlets would be at franchises of the same brand.
This does not seem to be nearly as insidious or restrictive as some are claiming.
Why is there an "insightful" mod and why isn't it "-1"? If I wanted insight, I wouldn't be reading
that's part of the 40 years of productivity gains. Better software, faster CPUs, longer life cycles for existing hardware. It's not all just AI taking jobs. Not that AI doesn't cost jobs. I've got friends who used to do net ops monitoring who've been replaced by AIs (e.g. the kind that can learn which alerts need to be actioned after some training).
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Did the NPR really say, âoe... investigated by a coalition of 11 state attorney generalsâ? The NPR has editors and proofreaders, they know that itâ(TM)s not âoeattorney generalsâ but âoeattorneys generalâ, plus they know that DC is not a state. What their article said was, âoeNow, 10 state attorneys general and the District of Columbia are taking on the issue with an investigation into eight national fast-food chains.â
Copy/paste is your friend.
You're not forced to pay union dues in the UK (unless you want to join a union), but you can't be arbitrarily fired.
I do not understand why workers should benefit from a union if they are not paying for it. If you do not want to pay for the union you get what the company will offer you. A union should not have to negotiate for non-union members.
Google and Apple and others lost a lawsuit over mutual non-solicitation pacts.
"First they came for the slanderers and i said nothing."
I do not understand why workers should benefit from a union if they are not paying for it. If you do not want to pay for the union you get what the company will offer you. A union should not have to negotiate for non-union members.
You do realize that, in the opinion of not insignificant number of non-union members, the issue is that the union does not do a decent job of representing them, right? The side that's actually going to protest this more is the unions, because if you can't be forced to join and they can't claim to represent you if you didn't, this means they can't do very much if they failed to convince people that there is a benefit to joining.
Never assume anybody who turns up to represent a group in negotiations actually has the right to do so, and will accurately act in the interests of those they say they represent. Even if everybody involved seems honest and well-meaning, you should check. It will at least ensure that you don't find yourself having to try to convince people that it was perfectly reasonable for you to believe 'Fakey McRingerson' was...well...not accurately named.
The problem is not really the former employer suing the employee. It's the prospective new employer declining the new hire because they are in cahoots with each other.
The big chains will beat you. McDonalds INVENTED automation and lower middle class chef jobs were the first to take the cut with the introductions of franchises. No training needed like you said. Follow pictures of assembly and have metal pans of ingredients and an order to do something repetitively over and over again. If the employee is upset or not as long as he moves his hands fast product comes out in massive numbers. Morale makes no difference. Meat comes pre-marinated. Vegatables come presliced from Mexico. Just load and go as no chefs are needed for great recipes anymore.
Sure, if you have no pride in your work at all.
Only in some countries. In NZ they are meaningless. They can pay retainer, but once they stop paying you they cannot interfere with your ability to earn. However if you breach a NDA (good luck proving it) you are still on the hook.
If information wants to be free, why does my internet connection cost so much?
I ALMOST signed one that would have prevented me from working on this quarter of the globe for 2 years after I left one company I interviewed with.
THey had a short "You will not work for any company listed as a client, potential client, or competitor for 2 years in any position" The list of their Clients, Potential Clients, and Competitors looked like the New York City Phone book.
Yeah, chief. NO. Not for $60K and a 401k