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Joe Biden
stated on July 22, 2020 in a SEIU roundtable discussion:
“McDonald’s (makes) you all sign noncompete contracts that you cannot go across town to try to get a job at Burger King.”
true false
Democratic presidential candidate Joe Biden talks about his economic program at a campaign even in Delaware. (AP Photo/Andrew Harnik) Democratic presidential candidate Joe Biden talks about his economic program at a campaign even in Delaware. (AP Photo/Andrew Harnik)

Democratic presidential candidate Joe Biden talks about his economic program at a campaign even in Delaware. (AP Photo/Andrew Harnik)

Jon Greenberg
By Jon Greenberg July 28, 2020

Biden wrong that McDonald’s workers can’t jump to competing chains

If Your Time is short

  • McDonald’s line employees do not sign noncompete agreements.

  • Until three years ago, McDonald’s barred its franchise owners from hiring away staff from other local McDonald’s.

  • In the years since 2017, McDonalds and over 150 national chains have ended the practice.

Presumptive Democratic nominee Joe Biden showed sympathy for a beleaguered McDonald’s worker, but his tough words about the fast food giant got nearly every detail wrong.

At a roundtable organized by the Service Employees International Union, a single mother told Biden about her struggle to take care of her son as COVID-19 has shuttered his school, while her pay barely allows her to get by.

"I don’t get any kind of benefits," said Adriana Alvarez. "No parent who works hard and plays by the rules should have to go through what McDonald’s is putting us through."

Biden commiserated, saying McDonald’s relies on a strategy to suppress wages.

"McDonald’s is making billions of dollars, but here’s the deal," Biden said July 22. "They’ve made you all sign noncompete contracts that you cannot go across town to try to get a job at Burger King. And maybe, and I’m not saying you could, but you get 25 cents an hour more. People who are hourly workers are required to sign noncompete: ‘I will not go anywhere to any business like the one I’m in to get a raise.’"

Line employees at McDonald’s franchises don’t command high wages, but Biden was wrong about the use of noncompete contracts. 

Factcheck.org found several problems with this claim. Biden campaign spokesman Micheal Gwin said that Biden was making the larger point that low-wage workers face barriers to moving to better paid work. 

Mixing clauses: noncompete and no-poach 

Biden said McDonald’s workers sign employment contracts with language that blocks them for working for a competing fast food chain such as Burger King.

They don’t. A noncompete agreement prevents someone from working for a competitor. That was not the case. Any McDonald’s worker who quit to work at a Burger King is free to do that.

There was a time when they faced a different hurdle. They were blocked from moving from one McDonald’s franchise to another McDonald’s franchise. That is what economists have dubbed a no-poaching clause, and it applies only among franchises within the same chain.

Until 2017, that was part of the agreement between the local franchise owners and McDonald’s Corp., the franchiser. The local owners could not lure workers away from each other.

Featured Fact-check

The workers would never see that clause, so  Biden was incorrect when he said they signed noncompete contracts.

A dated allegation

In 2017, a McDonald’s worker in Illinois sued the company because she was barred from getting a job at another McDonald’s restaurant where she would make more money. In March that year, McDonald’s announced it would no longer enforce that part of its franchise agreement and would no longer include it in future agreements.

For other chains, the change took longer.

In January 2018, the Washington state attorney general’s office began investigating the no-poach practice among a wide range of franchise companies. The investigation drew heavily on research by two Princeton University economists who found that 58% of franchise operations used this strategy and it likely kept wages down.

By July 2018, more chains had agreed to drop the practice, both in Washington state and nationally. The list included Arby’s, Cinnabon, Buffalo Wild Wings and others.

Burger King, Pizza Hut, Denny’s and five other chains signed similar agreements by September 2018.

In the October of 2019, Washington’s assistant attorney general told Congress that 155 corporate chains representing 160,000 locations nationwide had dropped the practice.

The International Franchise Association, a trade group, said in a statement that there’s no question that the "clear trend is the franchise business is moving away from the use of these no-poach contracts."

The Biden campaign said the situation with no-poach clauses has moved in the right direction, but it's hard to say that the practice no longer exists.

Our ruling

Biden said that McDonald’s workers sign a noncompete agreement that bars them from taking a better paying job with a competing chain. Until three years ago, McDonald’s did have a clause in its franchise agreements between the corporation and local owners that blocked them from hiring away staff from each other. McDonald’s ended that practice in March 2017, and since then, over 150 national chains have followed suit.

That practice involves a no-poach clause, not a noncompete clause, which has to do with working for a competitor. McDonald’s workers do not sign a noncompete agreement.

We rate this claim False.

 

Our Sources

Rev.com, Joe Biden Roundtable with SEIU Transcript, July 22, 2020

National Bureau of Economic Research, Theory and Evidence on Employer Collusion in the Franchise Sector, July 2018

Washington State Office of the Attorney General, No-poach initiative, Oct. 28, 2019

U.S. District Court Northern District of Illinois, Deslandes v. McDonald’s USA, June 28, 2017

New York Times, Why Aren’t Paychecks Growing? A Burger-Joint Clause Offers a Clue, Sept. 27, 2017

The American Conservative, Non-Compete Clauses Are Strangling Our Lowest Paid Workers, April 4, 2019

NPR, Fast-Food Chains Back Away From Limits On Whom They Hire, July 12, 2018

Factcheck.org, Biden’s False Claim About McDonald’s, July 24, 2020

Statement, press office, International Franchise Association, July 27, 2020

Interview, Michael Gwin, spokesman, Biden for President, July 27, 2020

 

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Biden wrong that McDonald’s workers can’t jump to competing chains

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