Today, Congressman Jerrold Nadler (D-NY), Ranking Member of the House Judiciary Committee, along with Senators Cory Booker (D-NJ) and Elizabeth Warren (D-MA), reintroduced the bicameral End Employer Collusion Act, legislation that would crack down on collusive "no-poach" agreements that are often used by large franchisors to prohibit franchisees from hiring each other’s workers. 

When two or more employers agree not to hire each other’s current or former employees they engage in a no-poach agreement. Oftentimes employees are not even made aware of these agreements that deprive workers of competitive wages and benefits. Economists at Princeton University argue that no-poach agreements are chiefly intended to limit competition and turnover, suppressing wages. In 2022, the US Treasury Department published a study revealing that US workers are paid 20% less than they would be in a fully competitive market.

“Over the past several decades, waves of consolidation throughout the economy have imperiled the financial security of American workers. As a result, employers have immense power to restrict the wages and mobility of workers, and to justify anticompetitive mergers under the guise of corporate restructuring—which we all know means layoffs and unemployment,” said Representative Nadler. “Although the Federal Trade Commission is considering efforts to end anticompetitive employment practices like non-compete agreements, more is still needed to help workers. I am proud to join Senator Booker in reintroducing the End Employer Collusion Act, which will ban agreements employers make with each other promising not to “poach” each other’s workers. These collusive, no-poach agreements drive down wages and prevent workers from moving to better job opportunities.”

“Businesses shouldn’t be allowed to collude to suppress workers’ wages,” said Senator Booker. “Corporations already employ a variety of anti-competitive practices and no-poach agreements, often kept hidden from employees, are particularly predatory and serve to keep wages down and limit job opportunities. It’s time to ban these harmful agreements and protect the rights of all workers.” 

“These illegal ‘no-poaching’ agreements give big corporations the power to limit workers’ mobility, job opportunities, and wage growth,” said Senator Warren. “I’m glad to join Senator Booker once again to introduce the End Employer Collusion Act to eliminate these anti-worker, anti-market clauses.”

No-poach agreements have recently been challenged in several courts on the grounds that they violate section 1 of the Sherman Antitrust Act. No-poach agreements are common in the franchise industry and prevent employees from leaving one employer for another within the same franchise, impacting employees who seek additional hours or higher wages but are limited by employment opportunities.

Specifically, the End Employer Collusion Act would:

• Ban “no-poach” agreements that are often used by large franchisors to prohibit franchisees from hiring each other’s workers.
• Prohibit any agreements between employers that directly restrict the current or future employment of any employees.
• Prevent companies from using, threatening, or enforcing these kinds of restrictive employment contracts.

The full text of the bill can be found here. 

###