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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?
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".
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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. 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?
http://saveie6.com/
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.