A no-poaching agreement is an agreement between employers to not hire workers from each other. For example, employers agree not to solicit the other’s employees during their employment or not to hire them for a period of time after termination of employment. The U.S. Department of Justice (DOJ) has recently filed criminal charges for the first time against a company for using a no-poaching agreement.
In 2016, the DOJ and Federal Trade Commission (FTC) warned that no-poach and wage-fixing agreements violate federal law. No-poaching agreements make it harder for workers to be recruited by competitors or negotiate better terms of employment. The DOJ and FTC issued Antitrust Guidance for Human Resource Professionals and others involved in hiring and compensation. The guidance does not address other restrictive covenants, such as non-competition (non-compete) agreements (agreements between an employer and an employee).
There have been recent bipartisan attempts on the federal level to regulate non-competition agreements. Most states allow them, but there are often legal challenges to their validity, although many businesses have legitimate reasons for workers to sign those agreements. President Biden has indicated his administration will be supportive of federal legislation to eliminate most non-compete agreements and to have an outright ban on no-poaching agreements.
Employers should proceed carefully and consult with legal counsel as needed.