Non-poaching agreements are contractual agreements between two or more companies that prevent them from soliciting or hiring each other`s employees. These agreements are intended to protect a company`s talent and prevent its competitors from poaching its employees, which can cause significant disruption to a company`s operations.
Non-poaching agreements are particularly common in industries where skilled labor is in high demand, such as technology, healthcare, and finance. They are also common among companies that have close relationships with one another, such as suppliers and vendors.
Non-poaching agreements can take various forms, including standalone agreements between two companies or clauses in broader agreements such as joint venture agreements or supplier contracts. They can be mutually beneficial for all parties involved, as they help to maintain a stable workforce and ensure that employees are not constantly being lured away by competitors.
However, non-poaching agreements have come under scrutiny in recent years, particularly with regards to their potential impact on employee mobility and competition. Critics argue that non-poaching agreements restrict employees` ability to seek better job opportunities and can lead to wage suppression.
In fact, several major US companies, including Apple, Google, and Intel, were sued in 2010 for entering into non-poaching agreements that allegedly suppressed employee wages. The companies eventually settled the case for a total of $415 million.
In response to this case, the US Department of Justice issued guidance in 2016 stating that non-poaching agreements between companies could be considered anti-competitive and may violate antitrust laws. The guidance has led many companies to review and revise their non-poaching policies and agreements to ensure compliance with antitrust laws.
In conclusion, non-poaching agreements play an important role in protecting companies` talent and preventing disruption to their operations. However, they must be balanced with employees` rights to seek better job opportunities and competition in the labor market. As such, companies should take care to ensure that their non-poaching agreements comply with antitrust laws and do not harm employee mobility or wage growth.