What Are No Poach Agreements and Why Is Everyone Talking About Them?
Non-Solicitation Clauses in Employment Contracts
A non-solicitation clause is a legally binding contract provision that prohibits the solicitation or negotiation of employment with a specific person or group of people. These clauses are often included in employment contracts to protect the employer's confidential information and business relationships.
Types of Non-Solicitation Clauses
There are two main types of non-solicitation clauses:
- Customer Non-Solicitation Clauses: These clauses prohibit employees from soliciting the employer's customers for a specific period of time after termination of employment.
- Employee Non-Solicitation Clauses: These clauses prohibit employees from soliciting other employees of the company for a specific period of time after termination of employment.
Legality of Non-Solicitation Clauses
The legality of non-solicitation clauses varies from jurisdiction to jurisdiction. In general, these clauses are enforceable if they are reasonable in scope and duration. Courts will consider the following factors when evaluating a non-solicitation clause:
- The scope of the clause (i.e., the geographic area and types of customers covered)
- The duration of the clause
- The reasonableness of the clause in relation to the employer's legitimate business interests
- The impact of the clause on the employee's ability to earn a living
Why Are No Poach Agreements Being Discussed?
No poach agreements have recently come under scrutiny due to their potential to harm competition and suppress wages. These agreements can prevent employees from freely moving between jobs, which can lead to a reduction in innovation and economic growth.
In recent years, several government agencies have taken steps to limit the use of no poach agreements. In 2016, the Obama administration issued a memorandum directing federal agencies to scrutinize no poach agreements in government contracts. The Biden administration has also taken a strong stance against these agreements, with the Department of Justice announcing in 2021 that it would investigate and prosecute employers who use no poach agreements to suppress wages.
