Bill > A4545

Introduced Session

This bill makes it a violation of the "Franchise Practices Act" for a franchisor to prohibit franchisees from employing or seeking to employ an individual who is at the time or was previously employed by the franchisor or any other franchisee of the franchisor. Many franchise arrangements contain certain covenants that restrict the recruitment or hiring of individuals that are employed by other franchisees in the same chain. These covenants, also referred to as "no-poaching agreements," are prevalent within the restaurant and fast food industry. Under the bill, any employee of a franchisor or franchisee may bring an action for a violation of the prohibition in court to recover damages sustained and may also be entitled to injunctive relief. An employee bringing a successful action against a franchisor or franchisee will also be entitled to costs of the action. Although proponents of no-poaching agreements assert that the agreements protect employer investment in the training and professional development of employees, the employees of these fracnhises are often prevented from increasing their wages, hours, and other benefits because of the lack of employee mobility that comes with the no-poaching agreements. Moreover, the employees who are prohibited from moving within a franchise are often low-wage workers who do not have knowledge of the employment prohibition when they commence work. Limits on worker mobility may be a factor in wage stagnation because the agreements limit job opportunities. The purpose of this bill is to create greater labor market competition by prohibiting the use of no-poaching agreements by franchisors.

AI Summary

Committee Categories

Pedro Mejia (D)*, 

Introduced, Referred to Assembly Labor Committee (on 10/15/2018)