H&R Block’s No-Poach Contracts Were Anticompetitive: Lawsuit

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By Jacklyn Wille

H&R Block Inc. suppressed employee wages and restricted worker mobility by forcing no-poach agreements on its franchisees and company-owned stores, a new class action complaint alleges.

The tax preparation giant is accused of requiring its franchisees to sign agreements blocking them from soliciting employees of H&R Block or any of its franchises. The company allegedly follows a parallel policy in its company-owned stores. These no-poach agreements inhibit competition, restrict employee movement, and depress wages in violation of federal antitrust laws, according to the Nov. 23 lawsuit.

The specialized nature of H&R Block’s business—which requires thousands of seasonal workers who’ve undergone extensive, company-specific training—should lead to a “robust” competition for qualified workers, the lawsuit claims. Instead, the company’s anticompetitive conduct kept wages low: H&R Block’s seasonal tax preparers earn, on average, $10.86 per hour, while the Bureau of Labor Statistics lists an average hourly wage of $22.67 for tax preparers, according to the lawsuit.

The complaint follows a July 2018 announcement by 11 state attorneys general into no-poach agreements in fast-food industry franchise contracts. “Within days” of this announcement, H&R Block announced that it would stop including and enforcing no-poach agreements in its franchise contracts, the complaint alleges.

H&R Block employed more than 70,000 workers at the height of 2018 tax season, with franchise locations employing as many as 30,000 more, according to the complaint. The proposed class contains tens of thousands of members, the lawsuit alleges.

An H&R Block spokeswoman said the company is reviewing the complaint and doesn’t comment on pending litigation.

The case was filed in the U.S. District Court for the Western District of Missouri by Paul LLP and Hartley LLP.

The case is Ramsey v. H&R Block, Inc., W.D. Mo., No. 4:18-cv-00933-ODS, complaint 11/23/18.

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