Employers may face potential criminal and civil liability arising from the use of “no-poach” employment agreements. The no-poach agreement is gaining renewed federal and state government scrutiny for its potential antitrust impact on the economy. Private litigation includes class actions and multidistrict litigation accusing companies of: (1) striking deals with other companies, and/or (2) enacting hiring practices that allegedly violate the Sherman Antitrust Act, 15 U.S.C. §§1-7, by preventing employees from obtaining positions with other companies. Earlier this year, U.S. Senator Cory Booker introduced a bill, The End Employer Collusion Act, to clarify that no-poach agreements in the franchise context are illegal under federal antitrust law.

No-Poach Agreement

A no-poach agreement is different from other employment contracts such as a noncompete agreement, which is an agreement between the employer and the employee. A noncompete agreement permits a company to protect legitimate business interests, usually concerning the protection of trade secrets, confidential business information and goodwill.