Recruiting new employees is difficult these days, making it more important than ever to retain the staff you already have. Just make sure your retention efforts don’t cross the line into collusion with other employers.
Several states are cracking down hard on “no poaching” pacts in which competitors or partners reach gentlemen’s agreements not to hire away each other’s employees.
Recent case: Freight shipper Pittsburgh Logistics Systems has contracts with several trucking companies, including Beemac Trucking. PLS’s contract with Beemac includes language stating that both parties have pledged not to recruit or hire each other’s employees.
Even so, Beemac hired four former PLS employees, prompting PLS to sue both the workers and their new employer. The case worked its way up to the Pennsylvania Supreme Court, which had to consider the validity of the companies’ agreement.
It concluded that agreeing not to hire another company’s employees was unlawful restraint of trade. The court noted that agreements between employers not to poach each other’s staff members are unfair to employees, because they played no part in negotiating the terms, never had a chance to agree to the terms and didn’t receive anything in return. (Pittsburgh Logistics v. Beemac Trucking, Pa. Supreme Court, 2021)
Advice: Instead of no-poaching agreements, try accomplishing the same goal by asking employees to sign noncompete agreements. In most states, noncompetes are valid if they are limited in both time span and geographic area. Noncompetes must offer employees something of value in exchange for not being able to work for a competitor.
The HR Specialist