Burger King Employees Continue to Pursue No-Poach Claims Against Franchisor

By Kristen M. Smith

A group of Burger King employees are attempting to revive their suit over no-poach provisions in Burger King’s franchise agreement, after the suit was dismissed twice in federal district court.

The group of employees initially filed suit against Burger King in October 2018 in federal court in Florida, alleging that Burger King illegally barred its franchisees from hiring another franchisee’s employees, thus hindering job opportunities for employees.  The employees alleged that the no-poach provision in Burger King’s franchise agreement was per se illegal under federal antitrust laws.  The employees argued the no-poach provision effectively reduced employees’ bargaining power, which undercut wages.

U.S. District Judge Jose E. Martinez in Florida dismissed the case in March 2020 and again in August 2020 with prejudice, finding that separate Burger King locations were not independent businesses with competing interests in the context of no-poach provisions.  Instead, the court stated that in this context, Burger King restaurants are part of a “broader symbiotic relationship, which is entirely predicated on uniform operation.” The court said that because uniformity of the Burger King brand is needed for the brand’s success overall, the franchisor and franchisee were incapable of concerted action in violation of antitrust law.

The employees appealed to the 11th Circuit in November 2020, arguing that the lower court’s decision was wrong because Burger King franchisees are distinct from the franchisor in that they have sole discretion to make hiring and firing decisions.

The no-poach provision at issue is now defunct, because Burger King removed it from its franchise agreement in August 2018, when Burger King was one of many franchisors investigated by the Washington state attorney general for use of such provisions.  The Washington attorney general demanded franchisors stop enforcing no-poach provisions going forward and entered into settlement agreements with many franchisors, including Burger King, to refrain from enforcing such clauses in the future.  The class of Burger King employees pursued suit nonetheless for damages dating back to 2010. 

The current legal landscape with respect to no-poach provisions in franchise agreements is such that numerous state attorney generals–including Washington state, California, and Washington, D.C.–have taken the position that such provisions are illegal.  However, the decision by the federal district court in Florida takes an alternate position.  The appeal filed by the Burger King employees was argued in front of the 11th Circuit on September 22, 2021, and a decision has yet to be entered.  The result of this 11th Circuit appeal will provide insight on the 11th Circuit’s stance on this issue.

Please check back on our blog for updates on this case. Or, if you have questions, please reach out to me directly at Kristen.Smith@kentfranchiselaw.com or 215-751-2874.