McDonald's Facing Anti-Poaching Class Action Lawsuit

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Santa Clara, CA: McDonald’s is facing an antitrust class action lawsuit filed by a former department manager of a Florida McDonald's, alleging the fast food giant has a policy of prohibiting McDonald's restaurants from hiring employees from other franchises.

Filed by Leilani Deslandes, who used to work at a McDonald's franchise in Apopka, Florida, the lawsuit claims that Deslandes had to agree to McDonald’s non-compete clause when she was hired.

In the putative class action, filed in federal court in Illiniois, the complaint states that the noncompete clause caused Deslandes to lose out on a higher-paying job at a competing McDonald's in the Orlando area in 2015.

The lawsuit claims that McDonald’s "no-hire" clause contained in every franchise agreement constitutes a violation of antitrust laws both at the federal level and in Illinois, where McDonald's is headquartered.

"The collusion of employers to refrain from hiring each other’s employees restricts employee mobility," the lawsuit states. "This raises employers’ power in the market at the expense of employees and diminishes employee bargaining power. This is especially harmful to employees of McDonald’s and its franchises as those employees are usually paid below a living wage, and their marketable skills acquired through their work at McDonald’s primarily have value only to other McDonald’s restaurants and do not transfer to other fast-food restaurants or similar businesses."

The "no-hire" clause in McDonald's franchise agreements allegedly stipulates that franchises cannot employ people who have worked at another McDonald's franchise within the past six months. The lawsuit states that this not only violates antitrust law but also the Illinois' Consumer Fraud and Deceptive Business Practices Act.

According to Deslandes, she began working at a McDonald's franchise owned by Bam-B Enterprises of Central Florida Inc., earning $7 per hour. By 2011 she had risen to department manager of guest services, earning $12 an hour in 2011. From there, Deslandes claims she was working toward becoming a general manager, which included training coursework, online classes and phone conferences.

The lawsuit states that Deslandes was supposed to travel to McDonald's headquarters in Oak Brook, Illinois, for a week in April 2015 to complete training at "Hamburger University." However, her training was cancelled allegedly when one of her supervisors discovered Deslandes was a few months pregnant. Deslandes claims she immediately decided to look for another managerial job "that would appreciate her skills, not violate overtime law, not discriminate against her because she was pregnant, and would give her the pay and promotion opportunities she deserved based on her performance," according to the complaint.

When Deslandes found a managerial job at another McDonalds for a much higher wage of nearly $15 an hour, she was ultimately denied it due to the “no-hire” clause.

"This appeared to be a very good opportunity to leave a business that was underpaying employees, denying promotions and raises, and violating labor laws," Deslandes states in her complaint. "The new franchise expressed a desire to hire plaintiff with more pay, better promotion opportunities and a better shift, but said that it could not hire her because she was currently employed by another McDonald’s franchise owner, and it could not hire employees working at other McDonald’s franchises unless she was 'released' by the Bam-B franchise."

According to the lawsuit, the McDonald’s Bam-B franchise refused to release Deslandes from her contract, allegedly stating she was "too valuable." Deslandes claims she had to continue working at its McDonald's, letting go of the opportunity for the higher-paying job at the competing franchise.

"By adhering to the no-hire agreement, franchisees artificially restrict their own ability to hire other employees in a manner that is inconsistent with their own unilateral economic interests," the complaint states. "By acting in concert, however, they also artificially protect themselves from having their own employees poached by other franchises that see additional value in those employees, such as their training, experience and/or work ethic. This allows franchisees to retain their best employees without having to pay market wages to these employees or compete in the marketplace relative to working conditions and promotion opportunities."

Deslandes is represented by Derek Y. Brandt of Brandt Law LLC; Richard D. McCune, Michele M. Vercoski and Emily J. Kirk of McCune Wright Arevalo LLP; and Jason K. Whittemore of Wagner McLaughlin PA.

The case is Leilani Deslandes v. McDonald's USA LLC., case number 1:17-cv-04857, in the U.S. District Court for the Northern District of Illinois.

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