Employee Relations Law Journal, Vol. 45, No. 2, Autumn 2019

The Department of Justice has shined a spotlight on the potential antitrust risks associated with employers’ use of “no-poach” agreements in which companies agree not to hire or solicit each other’s employees. The authors of this article discuss the Justice Department’s statements of interest in “no poach” cases.

Authors: Michelle A. Mantine Edward B. Schwartz Jennifer M. Thompson

Since 2010, with its cases filed against a number of leading technology companies, the Department of Justice (DOJ) has shined a spotlight on the potential antitrust risks associated with employers’ use of “no-poach” agreements in which companies agree not to hire or solicit each other’s employees. Indeed, the DOJ and the Federal Trade Commission (FTC) issued joint guidelines in 2016 making clear that they would aggressively enforce the antitrust laws against such agreements between and among competitors as per se unlawful, including through criminal enforcement. Yet, the DOJ recently filed statements of interest in several antitrust cases brought against franchisors, taking the position that the no-poach agreements at issue in those cases were not per se unlawful and should be analyzed under the more forgiving rule of reason test. As discussed below, companies should not read the DOJ’s filings as reflecting a change in its enforcement policy when it comes to no-poach agreements. But the DOJ’s involvement in private, civil actions concerning the use of no-poach agreements bears watching and could ultimately provide helpful guidance to franchisors, manufacturers who distribute through independent dealers, and other companies that may wish to use no-poach provisions in their vertical contracts.