California No Poach Agreements

Employers have traditionally distinguished workers` non-demand provisions by relying on a 1985 California appeals court called Loral v. Moyes. 174 Cal. App.3d 268 (1985). The Tribunal found that a non-application was not contrary to Section 16600 and was enforceable. The court found that such a ban was a reasonable and limited restriction, which had little impact on staff mobility and helped to promote the stability of the workforce by preventing assault and poaching of employees. On the heels of enforcement actions by states and the federal government and other legislative efforts to stop or limit the implementation of non-vaccination agreements in the private sector, advocates for class actions have gained momentur, and private complaints against non-poaching agreements are rising from coast to coast. See z.B. Deslandes v. McDonald`s USA, LLC (N.D. III. 2017); Ion v. Pizza Hut, LLC (E.D.

Tex. 2017); Frost v. LG Electronics, Inc. (N.D. Cal. 2018); Butler v. Jimmy John`s franchise, LLC, et al. (S.D. III.

2018); Yi v. SK Bakeries, LLC, et al. (W.D. Wash. 2018); Ogden v. Little Caesars Enterprises, Inc., et al. (E.D. Mich. 2018); Michel v.

Restaurant Brands Int`l Inc., et al. (S.D. Fla. 2018); Avery v. Albany Shaker Donuts LLC, et al. (S.D.N.Y. 2018); Newbauer v. Jackson Hewitt Tax Services, Inc. (E.D. Vir.); In re: H-R Block Employee Antitrust Litigation (MDL – N.D.

III.); In re: Railway Industry Employee No-Poach Antitrust Litigation (MDL – W.D. Pa). These lawsuits generally argue that the non-poaching clauses in the franchise agreements are contrary to the Sherman Act and the Clayton Act as an illegal restriction on the employment trade. Summary – In general, DOJ surveys weigh on companies, threaten individual decision makers and are very troublesome for the company, so the prospect of an investigation should be sufficient to prompt each company to stop and take note of this risk. In this context, the return to our hypothetical safest approach for our client with respect to preventing an antitrust investigation by the DOJ, the FTC, State AG or the civil counsel is not to authorize a “no-poaching” agreement with a potential competitor for the services of its employees, but rather to implement some of the alternative strategies mentioned above. A more common approach for companies to avoid a competitor poaching employees or “raiding” is to enter into agreements with existing employees that prohibit them from recruiting their former employees. These “no-hire” or “no-solicitation” agreements are legal in many states. Indeed, the media has suggested that these agreements will become increasingly popular in countries like Silicon Valley, because California law largely prohibits the application of non-competition bans. Many California employers use workers` non-invitation rules in their employment contracts. These provisions prohibit workers, both during their work and one to two years after, from asking employees of the company or independent contractors to leave the company.

Any decision to maintain such provisions in the California agreements should be made in consultation with counsel. Employers who comply with these provisions should ensure that these agreements have strong separation provisions. More importantly, these employers should go to a council if (1) a potential tenant refuses to sign an agreement because such a provision is not applicable and (2) the employer is considering imposing such a non-invitation provision to an outgoing worker. Employers should review their existing contracts to determine if they do not have poaching and assess whether they should be removed. In addition, staff professionals and others involved in recruitment and compensation decisions should review the DOJ/FTC “guidelines” to identify and avoid antitrust pitfalls.