April 15, 2022

Take Some Coaching About No Poaching

I get it. An employer wants to protect one of its greatest assets: its employees. So, the employer uses no-solicitation agreements: one for employees and one for its vendors and service providers. Each prohibits the other party from soliciting or employing any of its employees, aka no poaching agreements.
As a condition of employment, a candidate must sign a no-solicitation agreement, promising to not solicit any employee upon separation from employment for any reason. The employer requires the same of corporate vendors with whom they seek to do business. The vendor has to agree to not solicit or hire any of the employer’s employees. In a third scenario, competitors might even have an informal, oral or a wink-and-a-nod understanding to not do the same.
So, what’s the problem if all parties agree? See a related article from last summer. Since then, federal agencies and courts have been giving greater attention and scrutiny to these and similar arrangements as potential anti-trust violations.
Notably, last month a court ruled on a case brought by the U.S. Department of JusticeThe lawsuit alleged an employer and its CEO entered into and engaged in three separate conspiracies with other companies to suppress competition for the services of certain employees.  The court found in favor of the employer and CEO.   Last summer and again in January, 2022, President Biden has noted, “Capitalism without competition…[is] exploitation.”  So, before you hang your hat on this recent win for the employer, consider that other cases have gone and likely will go the other way.