Attorney General Bonta Files Legal Brief Opposing McDonald’s Attempt to Evade Liability for Past Efforts to Stifle Competition and Undercut Wages | State of California – Department of Justice

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OAKLAND – California Attorney General Rob Bonta today joined a coalition of 21 attorneys general in an amicus brief opposing McDonald’s attempt to evade liability for past alleged efforts to stifle competition and undercut wages through the use of “no-poach” agreements. No-poach provisions harm workers by contractually preventing franchise operators from hiring or recruiting the employees of another franchise operator, artificially reducing competition for labor and making it more difficult for employees, many of whom are low-wage workers, to seek better pay and benefits at competing franchises. In the amicus brief filed in an appeal from a class action case against McDonald’s before the U.S. Court of Appeals for the Seventh Circuit, the coalition highlights the harms of no-poach agreements and urges the appellate court to reverse the lower court’s decision. 

“No-poach agreements like those employed by McDonald’s in this case stifle competition and directly undercut wages,” said Attorney General Bonta. “In California, no-poach agreements are not enforceable and members of the public should immediately report them if they see them. At the California Department of Justice, we will continue to fight to support businesses and workers who do things the right way. No corporation is above the law. My office urges the appellate court to follow the law and give the plaintiffs an opportunity to make their case.”

The case — Delandes v. McDonald’s — involves antitrust claims brought against the fast-food corporation by a putative class of former McDonald’s workers. The workers contend that McDonald’s, until 2017, required all McDonald’s franchisees to sign a franchise agreement that contained a no-poach provision prohibiting franchisees from seeking to employ workers who currently worked for any McDonald’s restaurant, or who had done so in the prior six months. The district court, in a series of opinions, erroneously rejected the plaintiffs’ claims. If affirmed, the opinions have the potential to distort the applicable case law on the appropriate treatment of no-poach agreements under federal antitrust law. This, in turn, could impede the ability of states to protect their residents by enforcing both federal and state antitrust laws against companies that utilize no-poach agreements. 

In California, employers are generally prohibited from enforcing no-poach or noncompete agreements, including employers who operate out of state but employ California residents. Even when invalid, these agreements can discourage workers from seeking new opportunities, causing workers in a variety of professions to mistakenly believe that they cannot pursue or accept a competitor’s offer of better pay or working conditions in fear of facing legal repercussions. From software engineers to baristas, those in noncompete agreements may believe that their only option is to continue to work for their current employer. These anticompetitive provisions also harm the economy by depriving businesses of the opportunity to hire workers who may otherwise be available or qualified. Noncompete agreements have proven to be harmful to wages, entrepreneurship, market concentration in the labor force, and equality in the workforce. 

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In the friend-of-the-court brief in support of the class action plaintiffs, the attorneys general assert: 

  • The district court erred in rejecting the plaintiffs’ argument regarding the application of antitrust law;
  • The district court improperly assumed the role of a factfinder or jury in the case;
  • Amici states have successfully protected workers within their jurisdictions by enforcing antitrust laws to police no-poach agreements; and
  • The appellate court should reverse the district court’s erroneous judgment.

More broadly, noncompete agreements are often buried in fine print and go unmentioned in discussions between workers and employers. Even worse, they are sometimes added to the terms of employment after a worker has accepted a job, or even after they have begun work. Workers who have been wrongly presented with, or have entered into, an unreasonable or overly restrictive noncompete agreement should report it immediately to the Attorney General’s office at oag.ca.gov/report.

In filing the amicus brief, Attorney General Bonta joins the attorneys general of Illinois, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Idaho, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, and Washington.

A copy of the amicus brief, as filed with the court, is available here.

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