The U.S. Court of Appeals for the 11th Circuit recently held that a franchisor and its franchisees engage in concerted action for purposes of Section 1 of the Sherman Act when they enter into “no-hire” agreements. In Arrington v. Burger King Worldwide Inc., the 11th Circuit relied extensively on Burger King’s standard franchise agreement. The court reasoned that “each franchisee is an independent center of decision making as to hiring or employment agreements.” In concluding that Burger King and its franchisees are each independent actors, the 11th Circuit’s decision largely focused on the existence of competition between the franchisees themselves.

The 11th Circuit’s decision in Arrington may signal that courts are becoming increasingly willing to scrutinize alleged restraints on labor markets. There has been an uptick in recent years in challenges to no-poach agreements by enforcement agencies and class-action plaintiffs. Employers should continue to be mindful of the potential antitrust risk involved in no-poach agreements, communications with competitors about wages or terms of compensation, and noncompete agreements.