Federal court grants final approval to a class action settlement in Papa John’s no-poach wage suppression case

A federal court in Kentucky has granted final approval to a class action settlement resolving antitrust claims that Papa John’s franchisees conspired to suppress employee wages through no-poach agreements. In In Re: Papa John’s Employee and Franchisee Employee Antitrust Litigation, No. 3:18-cv-825-BJB (W.D. Ky. Aug. 14, 2026), the United States District Court for the Western District of Kentucky approved a $5 million settlement fund benefiting a class of approximately 517,000 current and former employees who worked at Papa John’s restaurants between December 2014 and December 2021, bringing nearly eight years of litigation to a close.

No-poach or no-hire agreements are arrangements between employers in which they agree not to solicit or hire each other’s employees. The employees in this case alleged that these agreements made it harder to seek better-paying positions at other Papa John’s locations. They also alleged that the arrangements suppressed wages and limited worker mobility across the franchise system. The employees further alleged that Papa John’s franchisees and corporate officers participated in these arrangements in violation of the Sherman Act, a federal antitrust law that generally prohibits agreements that unreasonably restrain competition.

The plaintiffs’ uncontested expert estimated $195 million in class-wide damages. After eight years of litigation, including extensive document review and depositions, the parties ultimately resolved the case through a settlement that included both monetary and non-monetary relief as follows:

• A $5 million settlement fund distributed to class members.
• A five-year prohibition on no-poach or no-hire provisions in any new Papa John’s franchise agreement.
• A requirement that Papa John’s email all franchisees reiterating its commitment to eliminating these provisions.
• Antitrust compliance training for Papa John’s executives.

The court found the settlement “fair, reasonable, and adequate” despite its steep discount from the estimated damages. It considered the significant risks of continuing the litigation and the fact that no court had yet considered this type of claim when the case was filed. Because approximately half the class was subject to arbitration agreements that made individual recovery impractical, the court concluded that the settlement was their only realistic path to recovery.

This case demonstrates that franchisors can face legal risk because they design and oversee the franchise system. As such, they should ensure that the agreements, policies, and culture they establish do not encourage or tolerate no-poach arrangements. Key steps may include:

• Audit franchise agreements, operations manuals, and training materials to remove any provisions that may restrict employee movement between franchise locations.
• Affirmatively prohibit no-poach clauses in new franchise agreements, communicate that policy clearly to all franchisees, and implement antitrust compliance training for corporate leadership.
• Recognize that no-poach claims are becoming more viable as the law develops and that government enforcers and plaintiffs’ counsel are actively targeting these arrangements.
• Consider the real costs of inaction: the Papa John’s case lasted eight years and required extensive document review, depositions, and expert analysis before it settled.

This case also presents a separate but equally real risk for franchisees. The employees alleged that it was the franchisees themselves who “colluded” with one another, not just corporate or management. Individual operators may therefore face liability for these arrangements as well.  As such. franchisees would be well-served to:

• Be aware that informal or “handshake” agreements with neighboring franchisees not to hire each other’s workers can create potential liability.
• Do not rely on the franchisor to solve this problem. Although the settlement required Papa John’s corporate to ban no-poach provisions going forward, one should independently review hiring practices and any understandings with other operators.
• Remember that arbitration agreements with employees do not insulate one from being sued. In this case, such clauses only determined whether individual workers could join the class action, but they did not prevent the lawsuit itself.

This settlement reflects the continuing trend of enforcement directed at no-poach agreements in franchise systems. Businesses that rely on the franchise model should proactively evaluate their employee mobility practices to minimize legal exposure.