New Jersey is taking a stand against the unreasonable of non-compete agreements and other restrictive covenants in the fast food industry. New Jersey has joined a group of states leading an investigative charge against several corporations in the fast food industry for the utilization of no-poach and non-compete agreements. While non-compete agreements are common in a wide variety of industries in which the companies could show they have a protectable interest in restricting an important and/or high wage earner, this is rarely this case in the fast food industry. Because of this, the New Jersey Attorney General has decided to address the issue.
Non-compete agreements are a type of restrictive covenant where an employer restricts an employee from working in a particular industry for a definite period of time after the separation of their employment. Non-compete agreements often seek to restrain employees from working for specific competitive companies, while others prohibit the employee from working in the entire industry for a particular period of time. When these agreements are in place, they leave employees with only two options: attempt to move up the ranks of their own individual franchise location or find work in a different industry. Plaintiff-side employment lawyers often argue that non-competes damage labor competition within particular industries, suppress wages, restrict an employee’s earning potential and cause damage to a state’s economy. Defense-side employment lawyers argue that their employer clients extend substantial resources in employees that is worthy of protection for a period of time.
The corporations involved in the New Jersey investigation include Burger King, Dunkin’ Donuts, Five Guys Burgers and Fries, Little Caesars, Wendy’s, Arby’s, Popeye’s Louisiana Chicken and Panera Bread. The large size corporations allow them to nearly dominate the fast food industry, which heightens the impact that the non-compete agreements have on fast food employees. Fast food employees are particularly at risk of being damaged by restrictive covenants because of the trend of low wages and a common lack of resources available to them. These employees usually lack high levels of education and can be desperate for work. They typically do not have access to attorneys who can review their employment agreements or explain their protected rights. Because of this, New Jersey along with other states are attempting to address the harmful policies in order to protect the rights of vulnerable individuals.