December 22, 2019

Litigation over Employee ‘No Poach’ Agreements Continues to Pick Up Steam,” American Bar Association Compliance and Ethics

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Companies sometimes enter into so-called “nopoach” agreements: a pact not to compete for each other’s employees. If such a covenant is not reasonably necessary to any separate, legitimate business collaboration between those companies, the no-poach agreement is considered “naked.” Because they eliminate free competition, naked nopoach agreements are per-se unlawful.23 In October 2016, the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”) issued Antitrust Guidance for Human Resources Professionals24 (the “Guidance”) and an accompanying document called Antitrust Red Flags for Employment Practices25 (“Red Flags”). The Guidance and Red Flags were a warning to Human Resources professionals that “naked” employee no-poach agreements might be prosecuted criminally by the DOJ going forward.