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Tara A. Speer is a member of Stark & Stark’s Business & Corporate Group, where she focuses her practice in franchise and employment matters. Ms. Speer concentrates her practice on helping franchisors manage all aspects of the franchise relationship including handling state regulations, advising on day-to-day franchise relations, and preparing disclosure documents, franchise agreements, development agreements, management agreements, and supplier agreements.

McDonald's No Poach Clause in Franchise AgreementsFor the past few years, it seems franchisors have been riding a roller coaster when it comes to no-poach clauses in their franchise agreements. While for a time it seemed as though scrutiny for such clauses might be fading, on February 17, 2022, the Department of Justice (“DOJ”) filed a motion requesting permission to file a statement of interest in an ongoing case involving restrictions contained in McDonald’s’ franchise agreements. These restrictions prohibit the solicitation or employment by franchisees of individuals who had worked at another McDonald’s. McDonald’s had been relying on an existing statement of interest filed in a separate case by the DOJ during the previous administration’s tenure that called for an evaluation under the “rule of reason” rather than as a “per-se” violation under the Sherman Act.

Continue Reading No-Poach Clauses in Franchise Agreements: The Saga Continues in 2022

FTC notice of penalty franchiseThe Federal Trade Commission (“FTC”) has kept itself busy as of late, issuing a series of notices to over 1,000 businesses (many of them franchise companies) advising them that they could face civil penalties for conduct that the FTC has deemed unlawful. The Notice of Penalty Offenses Concerning Money-Making Opportunities is of particular importance to franchise companies. The first round of notices went out in late October. They advised businesses that if they deceive or mislead consumers about potential earnings or otherwise make false or misleading representations in connection with a money-making opportunity, they could be subject to large civil penalties (up to $43,792 per violation).

Continue Reading FTC Issues Penalty Offenses Concerning Money Making Opportunities to Hundreds of Franchise Companies

Effective November 5, 2020, New Jersey public and private sector employers will have a new set of health and safety mandates to follow if they plan to allow or require employees to perform services at a New Jersey worksite. Although many of the requirements have most likely already been adopted as best practices, failure to adhere to the requirements will now carry fines and penalties for non-compliance including, but not limited to, business closure. An employee complaint system will be implemented for violation reporting. Accordingly, all employers should be mindful of the requirements and ensure immediate implementation.

Continue Reading New Requirements for New Jersey Employers as COVID-19 Numbers Continue to Rise

The second largest consumer tax preparer in the United States has just been hit with a lawsuit filed by former employees alleging a “no-poach” conspiracy between the company and its franchisees, according to a complaint filed in New Jersey federal court.

In the suit, the former Jackson Hewitt employees seek to represent any person who worked at one of the tax company’s locations between January 2000 and December 2018. This proposed class action suit is seeking treble damages, attorney fees, and an injunction that would prohibit the company from using agreements that prevent employees from moving between Jackson Hewitt locations going forward.

Continue Reading Jackson Hewitt Hit with “No Poaching” Clause Lawsuit

A former Cinnabon employee in Washington can now move forward with a proposed antitrust class action suit over the company’s allegedly anticompetitive “no-poaching” agreements. These agreements are alleged to prevent franchises from hiring away workers from other Cinnabon franchises, thereby eliminating wage competition.

Continue Reading Cinnabon ‘No-Poach’ Lawsuit Moves Forward

Recently, the National Labor Relations Board (NLRB) issued a Notice of Proposed Rulemaking which is intended to roll back a controversial 2015 decision that loosened the board’s test for determining whether businesses like franchisors and franchisees are joint employers under the National Labor Relations Act.

Continue Reading National Labor Relations Board Released Proposed Rule to Undo Browning-Ferris

The U.S. House of Representatives lawmakers announced last week that they have prepared a bill that would establish that a business simply licensing a trademark, such as in the case of a license from a franchisor to a franchisee, would not create a so-called “joint employer” relationship.

Joint employment is the sharing of control and supervision of an employee’s activity among two or more businesses. This new bill, called the Trademark Licensing Protection Act of 2018, declares that if a company is licensed to use a trademark, this should not be enough to establish “an employment or principal agent relationship” between the two licensing entities.

Continue Reading House Lawmakers Unveil New Joint Employer Bill

Eight national restaurant chains have agreed to drop provisions in their franchise agreements that prohibit franchisees from hiring fellow franchisees’ employees. The removal of the “no-poach” hiring stipulation will be effective at all of their locations nationwide.

This move comes at the heels of announcements from Attorneys General from 10 states and the District of Columbia to investigate these “no-poaching” agreements. In addition to criminal and civil enforcement by both the state and federal governments, several franchisors are also facing federal class action lawsuits from employees alleging they were adversely affected by “no-poach” agreements.

Continue Reading Franchisors Face Class Action Lawsuits & Government Enforcement over “No-Poach” Agreements

With the recent news out of Washington that the Department of Labor has withdrawn Administrator’s Interpretation 2016-1 (its previous informal guidance on joint employment under the Fair Labor Standards Act (“FLSA”)), and with the National Labor Relations Board pulling back the broad joint employer standard set in the 2015 Browning-Ferris Industries of California, Inc. case, many are under the impression that the joint employer storm has passed.

While these are certainly welcome developments, franchisors should be careful not to dismiss the threat of joint employer liability too quickly. This is particularly true if you have outlets located in Maryland, Virginia, North Carolina, South Carolina, and/or West Virginia.

Continue Reading Joint Employer: Still a Potential Threat

It has been a little over a month since the Opportunity to Compete Act (the “Act”) went into effect in New Jersey. The Act, which is New Jersey’s version of Ban the Box, was originally signed into law on August 11, 2014, giving employers roughly 6 months to review and revise their employment forms and practices to conform to the new mandates.

The enactment of the law solidifies New Jersey’s position regarding the use of criminal background checks during the initial employment application process. Although this movement has been in effect on a local level in many locations for some time, the Act specifically declares that any attempts to regulate this conduct on a local level are pre-empted by the Act, unless done so to regulate municipal operations.

Continue Reading New Jersey Has Officially Banned the Box: Employers Must Update Forms and Procedures