Since non-poaching agreements eliminate competition, the government generally considers them a violation of antitrust law. Job poaching is the deliberate act of a company hiring an employee or group of employees currently employed by another competing company. The term « poaching » refers to illegal hunting, but professional poaching is not illegal. To combat job poaching, many companies have entered into no-poaching agreements with their rivals and have agreed not to hire or recruit employees from their competitors. These agreements eliminated competition for workers, depriving workers in these labor markets of the opportunity to seek better opportunities and negotiate higher wages through competing offers. Job poaching occurs when a company hires an employee from a competing company. Job poaching often takes place in growing industries that require employees with high-demand skills. Anti-poaching agreements or non-poaching agreements refer to non-compete obligations, but different – non-poaching agreements are between employers, non-competition clauses are between employer and company. In the United States, anti-poaching deals were prevalent among franchises: one study found that 58 percent of major franchisors` contracts in 2016, including those at McDonald`s, Burger King, Jiffy Lube and H&R Block, included agreements that other franchisees don`t hire employees. [2] Some franchisors have since stated that they will abandon these agreements. [3] Not only have tech companies entered into no-poaching deals; Fast food companies have also tried to limit their workers` ability to walk and work for someone else, even if those employees were not the kind of knowledge workers or highly skilled workers traditionally seen as targets of job poaching. Such no-poaching deals severely limited the ability of these workers to work in other franchises or restaurants. Given this decision, employers who are concerned about losing valuable employees to their customers should keep a few things in mind.
First, no poaching rule should be formulated in the narrowest and fairest way possible. Second, an alternative and perhaps more effective way to prevent employee poaching could be to enter into non-compete obligations and/or solicitation bans directly with employees. While there are limited exceptions to the use of anti-poaching agreements, the Department of Justice has made it clear to employers that it intends to eagerly enforce the ban on anti-poaching agreements. The use of anti-poaching agreements has benefited employers for years. Newly hired employees need to receive training and participate in an onboarding process that is usually expensive and time-consuming. Anti-poaching agreements allow employers to protect their investments in existing employees. In addition, these types of agreements also help employers retain talented employees who might otherwise be sought after by competing companies. These DOJ warnings are not empty threats. The Department of Justice has filed civil lawsuits against several tech giants. Id. at 3-4. The Department of Justice has also interfered in private « no poaching » antitrust litigation.
In Seaman v. Duke University, Duke eventually paid $54.5 million to settle a class action lawsuit alleging a no-poaching agreement between Duke and the University of North Carolina. The DOJ filed an expression of interest in the dispute, and the settlement included provisions allowing the DOJ to monitor compliance and enforce its terms.[2] An important issue for DOJ targets is the likelihood of class actions. For example, the lawsuit filed by the Department of Justice in April 2018 against Knorr-Bremse AG (a German manufacturer of train-related equipment) resulted in settlements of $48.95 million by February 2020. In the case: Railway Industry Employee No-Poach Antitrust Litigation, MDL No. 2850 (W.D. Pa.). Find out why job poaching happens, who benefits from it, and what companies are doing to limit it. How to keep employees legal and protect trade secrets Certainly, an employer can not only protect themselves from the loss of a valuable resource (i.e. An employee), but also the risk that this resource will pass on the employer`s valuable trade secrets and inside information to a competitor.
But a no-poaching clause with the potential future employer/poacher is definitely not the way to go! A second count of the indictment alleges that SCA and a « Company B » were also involved in similar illegal activities. For example, the indictment states that an SCA hiring manager sent an email to a recruiter that Company A and Company B are « taboo to SCA. » The non-poaching agreement is explained as follows: « […] We can hire junior staff (below the director), but our agreement is that we would only talk to senior managers if they have already told their boss that they want to leave and are looking for it. An email from an SCA human resources manager to a candidate is quoted stating that SCA cannot recruit to Company B « unless candidates have received explicit permission from their employers that they may be considered for employment with us. » The U.S. Department of Justice (DOJ) and U.S. Federal Trade (FTC) Guidelines (« Guidance ») are available on the DOJ website[1]. In its guidelines, the Department of Justice states that « [a] person is likely to violate antitrust laws if he or she … agrees with people from another company to refuse to recruit or hire employees from that other company (so-called « no-poaching » agreements). Id. at p.
3. The consequences of concluding a no-poaching agreement are significant. On the same page, the Department of Justice states that « non-poaching agreements between employers, whether entered into directly or through a third-party intermediary, are in themselves illegal under antitrust laws. » Id..