Labor: Antitrust concerns with non-hire and non-solicit agreements

The DOJ’s investigation into technology companies serves as a warning for employers

Employers will often enter into restrictive covenants to serve some legitimate business purpose. These restrictive covenants, often entered into with potential, current or departing employees, take several forms: general non-compete agreements, and agreements not to solicit or hire current company employees. The latter type of agreements serves to avoid the situation where a departed employee will help raid or “poach” additional employees from the former employer.

There are occasions when one company will bring in the departed employee’s new employer, and seek to enter into an arrangement with the new employer (prior to or in the context of a threatened suit over the employee’s conduct) that prohibits the hiring or solicitation of employees for a period of time. From a legal standpoint, the question typically is whether such agreements with the employee or the employee’s new employer will be enforced by a court. But an additional question cannot be overlooked: Does the non-hire or non-solicit agreement violate federal and state antitrust laws?

Contributing Author

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Michael Schmidt

Michael C. Schmidt is a member of Cozen O'Connor and practices in the firm’s Labor & Employment Group. He concentrates in representing management in...

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