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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Non-solicitation (“no poaching”) provisions, which prohibit one party from soliciting (or hiring) another party’s employees, are commonly included in many types of commercial contracts and employment agreements. While the common use of these provisions may cause companies to believe that including them in an agreement will not be a problem, companies should beware of the antitrust implications. The US Department of Justice (DOJ) and Federal Trade Commission issued a joint Antitrust Guidance for Human Resource Professionals in October 2016. These guidelines state, among other things, that naked no-poaching agreements are per se illegal under federal antitrust laws. Also, the DOJ will seek criminal enforcement for no-poaching and wage-fixing conduct that occurs after October 2016.

Since the release of those guidelines, the DOJ has made a number of public statements about its focus on investigating no-poaching and wage-fixing agreements. Last week, the Antitrust Division of the DOJ once again noted that active criminal investigations are taking place, with a number of those investigations focused on the healthcare industry. While some no-poaching agreements may be permitted under limited circumstances (such as a joint venture with clear specifications), other no-poaching agreements may be subject to enforcement actions.

For more information, read the LawFlash.