DOJ Signals There Are Lawful “No-Poaching” Agreements
In January 2018, the Department of Justice (DOJ) communicated that it would ramp-up criminal enforcement actions against companies that have no-poaching agreements, which in past years have been seen by the DOJ as a hall-pass allowing employers to avoid competing for workers, stifle demand in a market, and keep wages lower. A recent settlement with three employers, however, has reinforced the notion that not all no-poaching agreements are the same and helped define which kinds of no-poaching agreements may or may not lead to civil or criminal liability. On April 3, 2018, the DOJ outlined that, to be enforceable and legal, these agreements must be ancillary to a legitimate business collaboration between the companies. More specifically, an enforceable agreement, according to the DOJ, must: 1) be in writing and signed by all parties; 2) identify the relevant collaboration between the companies; 3) be narrowly tailored to identify and affect only employees directly involved in the agreement; and 4) contain a specific termination date. “The DOL’s definition of lawful no-poaching agreements should be followed whenever employers are creating agreements between companies,” advises Joel O’Malley, employment attorney at Nilan Johnson Lewis. O’Malley has been advising clients on their no-poaching agreements for years, using similar terms to those recently validated by the DOJ. He encourages employers in particularly insular industries, such as rail, to pay special attention to the DOJ guidelines, as they may face enhanced enforcement due to a smaller labor force. To speak with Joel O’Malley about no-poaching and other non-compete agreements with respect to employment law, contact him at 612.305.7747 or firstname.lastname@example.org.