Dive Brief:
- Jiffy Lube and its parent company are facing a potential class action suit alleging that it prohibited franchises from hiring other Jiffy Lube employees, in violation of federal law (Victor Fuentes, et al. v. Royal Dutch Shell PLC, Shell Oil Company, Pennzoil-Quaker State Company and Jiffy Lube International, Inc., No. 18-5174 (E.D. Penn., Nov. 29, 2018)).
- It required franchise owners to enter into this no-poach agreement, which likely suppressed wages, the plaintiff argued. Because franchise owners are barred from hiring an employee from another location for at least six months after they leave, the practice obviates the "need for franchise owners to compete for the best workers."
- The plaintiff, Victor Fuentes, said he believes he is owed "antitrust damages for years of wage suppression."
Dive Insight:
No-poach agreements have garnered a lot of press of late.
At the federal level, the U.S. Department of Justice (DOJ) has been reviewing the practice and looking for what it calls "naked wage-fixing." In a 2016 guidance from DOJ and the Federal Trade Commission, HR professionals were notified that wage fixing and agreements not to hire another company's workers could result in fines as well as jail time. DOJ declined to pursue criminal charges against company representatives in its first enforcement action since the guidance, but noted that the government discovered the agreements — and the employer ended them — before the agencies had announced their intent to pursue criminal charges.
At the state level, attorneys general are working cooperatively to eliminate the practice that's often used by multi-state corporations. As a result, seven high-profile restaurant franchisors recently agreed to remove no-poach clauses from their agreements.
