SPIRIT OF THE LAW: Have Google, Apple, McDonald’s, Disney and Others  Illegally Suppressed Workers’ Wages?
Features, Law and Politics, National, Retail

SPIRIT OF THE LAW: Have Google, Apple, McDonald’s, Disney and Others Illegally Suppressed Workers’ Wages?

July 16, 2018

By Alexander Schmidt

Yes, appears to be the answer judging from recent legal settlements.

Fast food workers rally for livable wages outside a Times Square McDonald’s.

Major fast food industry chains agreed this week under pressure from Washington state’s Attorney General to stop including “no poach” clauses in their employee contracts nationwide. “No poach” clauses are non-compete provisions that prevent workers from leaving one fast food franchise to obtain a better or higher paying job at another franchise, even at a competing store within the same fast food chain.

McDonalds, Arby’s, Buffalo Wild Wings, Cinnabon, Auntie Annes, Jimmie Johns and Carl Jr.’s all agreed to stop including the no poach clauses in their franchise and employee agreements.

Secret no poaching conspiracies among competitors also have been recently challenged successfully in class actions against high tech industries. Such no poach agreements violate the antitrust laws, which among other things prohibit competitors from agreeing to fix their prices or eliminate competition as to their input costs of doing business. 

In a no poach agreement, each competitor agrees not to solicit or hire job applicants who work for a competitor, so that the conspiring companies won’t have to engage in salary bidding wars for skilled workers. The practice eliminates competition for labor among industry participants, reduces the number of job openings that would otherwise be available in that industry and, most importantly, keeps wages down and reduces employees’ mobility.

In a no poach agreement, each competitor agrees not to solicit or hire job applicants who work for a competitor, so that the conspiring companies won’t have to engage in salary bidding wars for skilled workers.

Tech giants Google, Apple, Intel and Adobe, among others, agreed to pay $415 million to their software engineers and other techies—an average of $5770 per employee—to settle class claims. Major studios including Disney, DreamWorks, LucasFilm, SONY Imageworks and Pixar settled a similar class action by paying $170 million to animators and digital artists who had alleged that no poach agreements existed among those firms. 

Employees whose wages are artificially suppressed by no poach clauses or secret no poach agreements among industry competitors are also receiving help from the Department of Justice (DOJ). The DOJ recently settled charges against leading railway equipment suppliers Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation (Wabtec), which agreed to end a 10-year no poach agreement among those companies and Faiveley Transport S.A. (which later merged into Wabtec). Class actions to recover damages for the affected workers have been filed as well.

The DOJ views no poach agreements to be antitrust violations that are just as per se harmful to competition as agreements among competitors to fix prices. The DOJ’s statement appears here: 

https://www.justice.gov/atr/division-operations/division-update-spring-2018/antitrust-division-continues-investigate-and-prosecute-no-poach-and-wage-fixing-agreements

July 16, 2018

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