What Are No-Poaching Agreements and Why Are They Bad for Employees?

Inside a board room

When you hear the word “poaching” you might think of hunters who violate hunting laws by “poaching” publicly-protected animals for their own benefit. In employment and hiring, however, some have used the term “poaching” to refer to hiring employees from competing organizations. But this so-called “poaching” of employees is actually a quite positive force for employees, and allows those employees to get paid the market rate for their services while forcing employers to pay them what they are worth. Thus, when employers enter into formal or informal “no-poaching” agreements with one another to prevent employees from being able to be hired at a more fair wage, those employers are actually engaging in illegal, anti-competitive behavior that state and federal antitrust laws are in place to prevent. If you are an employee whose earnings have been affected by illegal no-poach agreements between your employer and others (which you may not even be aware of), you can pursue legal action to win the financial recovery you are owed.

How No-Poaching Agreements Hurt Employees

As an employee, your employer has likely never told you whether or not it has entered into a no-poaching agreement with another organization or group of employers, but your wages may be hurt nonetheless. When employers illegally collude to agree not to recruit and/or employ workers from each other, they are essentially reducing the number of employers that are competing for that employee’s talents, which leads to:

  • Workers receiving below-market wages because there are fewer employers competing for talent
  • Workers having less opportunity to collectively bargain with their employers, and
  • A general lack of competition in the job market, helping employers raise their profits by being able to pay workers less without fear of another employer hiring them

No-poach agreements are common among franchise employers (including restaurants, gyms, auto service providers, etc.) who will enter into agreements with sister franchise owners to refrain from hiring workers. But such agreements can take place in any type of employment environment, and may be only informal, oral agreements among employers not to hire other workers.

What to Do If You Suspect a No-Poach Agreement Is in Place

Regardless of the type of no-poach agreement potentially in place, such agreements are illegal under federal antitrust law. According to the Department of Justice, “…no-poaching agreements among employers, whether entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws.”

In recent years, the DOJ has in fact brought official enforcement actions against some of the largest names in the marketplace – including Apple, Ebay, Intuit, Pixar, Intel, Google, LucasFilm, and Adobe – over no-poach agreements that were as informal as agreements among employers not to cold call each other’s employees for recruitment efforts.

The DOJ has said it will bring “criminal charges” against employers it finds to be engaging in no-poaching agreements, which is a strong sign of support from the federal government against these anticompetitive practices.

Ultimately, however, as an affected worker, your best option for pursuing justice against employers who harm your financial interests via these agreements may be to participate in and/or bring a class action employment lawsuit on behalf of yourself and other employees similarly injured by employers who illegally use no-poach agreements.  

Pursuing Your Right to Recovery for Injuries Due to No-Poach Clauses

McCune Wright Arevalo, LLP is currently pursuing a class action suit against McDonald’s for violations of state and federal anti-competition laws on behalf of all current and former McDonald’s employees negatively affected by the use of no-poach clauses. Contact McCune Law Group to learn more about potential participation in this class action lawsuit or to discuss bringing another potential no-poach class action lawsuit in your matter.

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