Jackson Hewitt has agreed to pay $10.8 million to settle a proposed class-action lawsuit over the tax prep giant scheming to limit employees' mobility and suppress wages.
The pending
The settlement — which Jackson Hewitt reportedly agreed to without admitting wrongdoing — will be used to pay eligible employees compensation "according to their earnings based on hours worked as a tax preparer at Jackson Hewitt," as well as associated legal costs.
New Jersey-based Hewitt, the second-largest consumer tax prep provider in the U.S. after H&R Block, has nearly 6,000 offices (some 2,000 company-owned locations and 4,000 franchise locations). The plaintiffs alleged this made the franchises "horizontal competitors to one another and to Jackson Hewitt's corporate locations," according to the settlement.
From 2014 through 2018, Hewitt included a clause in its franchise agreement prohibiting franchisees from hiring Hewitt's corporate workers (a "no-poach provision"). The plaintiffs alleged, "This is an illegal agreement that was not limited to what was laid out in the no-poach provision" and that the tax prep giant also maintained a "corporate culture" that discouraged soliciting and hiring of franchisee employees by Hewitt corporate and of Hewitt corporate employees by franchisees.
Plaintiffs also alleged this "corporate culture of restrictive hiring practices" continued well after the no-poach provision was removed from the company's franchise agreements.
In April 2019, the plaintiffs filed their amended consolidated class-action complaint, which alleged the no-poach provision had "the desired effect" of limited mobility and suppressed the pay of Hewitt employees.
