Are ‘no poaching’ agreements legal? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Are ‘no poaching’ agreements legal?

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in Hiring,Human Resources

Q. May two separate companies enter into an agreement to prevent each other from recruiting the best talent of each?

A. Be careful. If the agreement could be termed a “no poach” agreement, then the answer is no.

In the technology sector and in other fields, employees with advanced or specialized skills are highly valued, heavily recruited and frequently hired away from the companies for whom they work. As a result, rival companies may be tempted to enter into “no poach” or “no solicitation of employees” agreements with each other.

On May 1, 2014, however, the U.S. Department of Justice (DOJ) announced that it had reached a settlement of a lawsuit it had filed in 2012 to prevent such “no poach” agreements between firms. The lawsuit and settlement reflect the DOJ’s concern that such practices have the potential to restrain competition and distort the labor market.

Given the DOJ’s enforcement priorities, the watchword for employers is “caution.” Contact your attorneys for guidance.

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