Employer No-Poach and Related Restrictive Agreements Face Continued Scrutiny

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Three recent developments demonstrate that both the United States Department of Justice (DOJ) and courts around the country are continuing to scrutinize employer agreements that in any way restrict employee mobility.

First, in January 2021, the Antitrust Division of the DOJ filed its first criminal indictment against two outpatient medical care facilities alleging that as competitors, the two companies engaged in a conspiracy to suppress competition between them by agreeing not to solicit each other’s senior-level employees.  See U.S. v. Surgical Care Affiliates, LLC and SCAI Holdings, LLC, No. 3-21-cr-0011-L, in the United States District Court, Northern District of Texas, Dallas Division.   Currently pending before the Court is the employer-defendants’ motion to dismiss.

Second, in April 2021, the Pennsylvania Supreme Court found that a no-poaching agreement between trucking companies was unenforceable and against public policy because it created a “probability of harm to the public.”  See Pittsburgh Logistic Systems v. Beemac Trucking, LLC and Beemac Logistics, LLC, 2021 WL 1676399 (Pa. Apr. 29, 2021). 

Third, in May 2021, a federal district court in New York told parties settling a Fair Labor Standards Act case that the no-rehire provision in the proposed settlement agreement was “highly restrictive” and at odds with federal labor law.  In an order, the Court directed the parties to either agree to the Court’s striking of the no-rehire clause or submit an alternative settlement agreement or status update.  See Flores v. Greenwich BBQ LLC et al., No. 1:20-cv-09514, United States District Court, Southern District of  New York. 

These cases serve as a reminder to employers that no poach and no rehire agreements can be highly problematic and should be reviewed with counsel to determine whether, under current precedent, they are enforceable.


 

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