Jiffy Lube has reached a $2 million settlement in a class action lawsuit. The class consists of about 1,250 Philadelphia-area hourly employees, who claimed the company prohibited franchisees from hiring existing employees in its shops.

Case background

Jiffy Lube asked its franchise owners to agree to a clause in their contracts, preventing them from hiring anyone who had worked at another Jiffy Lube location within the past six months. The plaintiff argued that this violates the Sherman Antitrust Act.

The company denied wrongdoing. However, the settlement said that this allowed franchisees to “pay employees below-market wages without worrying that they would seek employment at another Jiffy Lube franchise with more attractive working conditions.”

The case has settled for $2 million, which will be divided among the 1,250 class members.

Department of Justice examines no-poach agreements

In related news, the Department of Justice is stepping up criminal investigations and prosecutions of companies with no-poach agreements. They have stated these type of agreements are per se violations of antitrust laws. Furthermore, they have issued a memorandum of understanding with the U.S. Department of Labor to exchange information on the subject. This can result in additional investigations by the Department of Labor.

The National Labor Relations Board and the Federal Trade Commission have also entered into a memorandum of understanding, which will form a partnership between the agencies to advance workers’ rights—including one-sided and overly restrictive contract provisions.

These developments are good news for employees, and should put owners and managers on alert. No-poach agreements will affect employee recruitment in the future.

If you’ve been subject to a one-sided no-poach agreement, you may have a valid legal claim. Contact a knowledgeable whistleblower attorney at Kardell Law Group to learn more.