An Obscure Law in Fast Food Chains May be Stagnating Wage Growth


It’s a common law of economics that as inflation and industry grow, so should people’s paychecks. This explains why most people’s grandparents fondly remember paying a quarter to go to the local movie theatres where nowadays they require a small bank loan. Costs grow, and job wages should keep up to keep the system equalized, that’s the natural order of things. However many economists have noticed a puzzling trend where wages are plateauing and not growing back much across the country.  

According to the New York Times, there is an obscure clause in the agreements new hires sign that could be the reason for this stagnation. To curb market growing competition, many fast food chains have banned the practice of hiring workers away from competitors to utilize their skills for a higher wage. This clause prevents an employee from ascending the corporate ladder or negotiating for a higher wage for their skilled services. Well, without having to completely quit their job and look for something that compensates them better for their services. Now those in favor of this rule, the executives and higher-ups of the restaurant business, normally defend themselves by saying that they are protecting their time and investment in their workers. And this kind of mobility freeze doesn’t affect just the fast food industry, although these types of restaurants have the most chains with this clause. Other industries with this clause include Maintenance services, Health and Fitness facilities, and travel services. 

Without any mobility, workers are almost chained to their position and can feel stuck. However in two lawsuits filed against CKE Restaurant Holdings, the parent company of McDonald’s and Carl’s Jr.’s the courts have decreed that these so-called “no-hire” clauses violate labor and antitrust laws. Since these laws are specialized designed to prevent competition in hiring and keep employees in stores they lower wages these stores have to pay their employees. Without a chance to climb out of a cashier position to upper management or to a store with better opportunities workers can feel like the pavement that the restaurant’s drive over to make profits.

According to the labor rights attorneys at Cary Kane LLP, this is a breach of employment agreements. As an employee you expect your employer to be looking out for your interests. After all, you work to better the company who employs you and they should give you fair pay for fair work. The relationship between employer and employee is cyclical and if one side is cheating the other then both don’t function as well.

Most of the time when someone takes an entry-level job, hard work will allow them upward mobility to reward their work ethic. However, due to sneaky tricks implemented by restaurants to keep labor costs low, this standard system doesn’t work. Thankfully the courts have recognized this behavior as unlawful and change will come soon.

Leave a Reply

Your email address will not be published. Required fields are marked *