Lawsuit: Carl’s Jr. Blocked Managers From Accepting Jobs With Other Franchisees

Image courtesy of Keenan Pepper

Do Carl’s Jr. restaurants prevent managers from moving between locations owned by different franchisees to keep wages artificially low and to prevent restaurants from competing against each other for the best employees? That’s what one current and one former employee allege in a lawsuit against the fast food chain, calling the policy unfair to those managers.

It happens that this lawsuit comes the week before the scheduled confirmation hearings for Andy Puzder, chief executive of Carl’s Jr. parent CKE Enterprises and President Trump’s nominee for Secretary of Labor.

A lawsuit like this is problematic for a nominee known for his belief in the free market: A labor market where employees can’t threaten to take their skills to a competitor is not a free one.

“There’s no pro-competitive justification that we can identify that would support having a restraint like this,” an attorney for the plaintiffs told the Los Angeles Times. “The only reason we can identify is to actively reduce labor costs to save them money.”

The plaintiffs claim that the no-hire policy hurts good supervisors and managers by removing their ability to leave for a different franchisee. The threat that they could leave would raise wages, the lawsuit points out.

The vice president and general counsel of CKE, meanwhile, didn’t address the substance of the lawsuit but did address its timing in a statement to the Times.

“While we will not comment on the specifics of any pending litigation, the timing of the filing of this baseless lawsuit is obviously intended to be an attempt, albeit a feeble one, to derail the nomination of Andy Puzder,” he said in a prepared statement.

Puzder’s confirmation hearing has been repeatedly delayed, raising questions about about his continued interest in the position. However, the businessman is now scheduled to appear before lawmakers next Thursday, Feb. 16.

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