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A recently filed wage-suppression class action against the burger franchiser Carl's Jr. claims that the company has conspired to suppress the wages of their restaurant managers and shift-leaders.
The gist of the lawsuit alleges that the agreements entered into by the franchisees contain no-hire and non-solicitation agreements which prevents the managers from being able to compete in the marketplace for their services. The putative class action complaint alleges that the company required these agreements "for the express purpose of depressing and/or reducing market-based wages and benefits increases."
Anti-Competitive and Antitrust
While it may seem like good business judgment to prohibit franchisees from competing over the same labor, it's hard to argue with the fact that the agreements alleged to be in place at Carl's Jr. would prevent managerial workers from being hired by other franchisees and thus stifles competition. And while requiring a worker to signed a limited non-compete could be valid, creating a network of franchisees all participating in a behind the scenes no-hire agreement, well, that's when things start looking conspiratorial.
As alleged, the existence of these agreements was revealed after an attorney general investigation in 2018, and the complaints asserts that these, per se, violate the Sherman Antitrust Act. The case seeks relief for any Carl's Jr. employee at the level of shift-leader or above in the state of Colorado from 2014 to present.