As an employer, you likely know that laws and regulations around the use of non-compete agreements or clauses within employment agreements have gotten stricter. While they’re a necessity in some types of industries, companies sometimes use them when they aren’t necessary. Even those employers who do need to use them have to make the terms reasonable so that they don’t prevent former employees from getting a job in their field.
There’s another type of agreement called a “no-poaching” agreement that some companies have used over the years. These are agreements among competing companies not to “poach” employees from one another. They may apply to current employees and/or those who have recently left their employer. Employees may not be aware of them, and they may not even be in writing.
What does the DOJ say about them?
What’s crucial to know – and to make sure the appropriate people in your company know – is that no-poaching agreements are illegal. Specifically, they violate federal antitrust laws. According to the DOJ, “An individual likely is breaking the antitrust laws if he or she…agrees with individual(s) at another company to refuse to solicit or hire that other company’s employees (so-called “no poaching” agreements).” Further, “It does not matter whether the agreement is informal or formal, written or unwritten, spoken or unspoken.”
When have courts ruled in favor of employers using these agreements?
It’s not unheard of for employers to prevail in cases brought by the DOJ regarding no-poaching agreements if they could show that they weren’t interfering with the labor market or engaging in “wage fixing.” Mergers and acquisitions are examples of when a no-poaching agreement might hold up in court.
Before anyone in your company, including your human resources professionals, participate in any type of agreement that could be seen as a no-poaching policy, it’s crucial that you get experienced legal guidance.