Employment Anti-Poaching Agreements: DOJ and FTC Guidelines, Antitrust Violations, Horizontal vs. Ancillary Restraints

Recording of a 90-minute CLE video webinar with Q&A

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Conducted on Wednesday, April 27, 2022

Recorded event now available

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Course Materials

This CLE webinar will advise employment counsel on current enforcement by the Department of Justice (DOJ) and Federal Trade Commission (FTC) of anti-poaching provisions in agreements that prohibit one company from hiring another company's employees. The panel will discuss recent cases that determine whether no-poach provisions violate applicable antitrust laws and what restrictive covenants may be enforceable. The panel will guide employers on best practices for achieving business protection through less anticompetitive means.

Description

Employees are the most valuable assets of any company. They create and protect trade secrets and cultivate customer/client relationships. A no-poaching agreement is an agreement between employers and businesses not to recruit certain employees or not to compete on compensation terms.

The DOJ's Antitrust Division opened its first major no-poach case in 2010, when it filed civil complaints against several Silicon Valley companies--including Lucasfilm, Pixar, Google, Apple, Adobe, and Intel--for instructing recruiting managers to enter into "no cold-call" agreements, in which the companies agreed not to initiate contact with one another's employees and to notify each other when making an offer to one of their employees. The settlements cost the defendant companies more than $400 million. In 2016, the DOJ and the FTC issued guidance that warned that the DOJ could bring criminal charges against managers, recruiters, and C-suite employees who initiate no-poach agreements.

On July 9, 2021, President Biden issued an executive order to prevent anti-competitive conduct, calling on the FTC to engage in rulemaking to prevent the unfair use of noncompete agreements. Thereafter, the DOJ has filed criminal charges for the first time against a company for using an employee no-poaching agreement. A federal grand jury returned a two-count indictment charging Surgical Care Affiliates LLC (SCA) for agreeing with competitors not to solicit senior-level employees from each other. SCA owns and operates outpatient medical care centers across the country. The charges demonstrate the DOJ's commitment to criminally prosecute collusion in the U.S. labor market.

The means of restricting future employment is important. Horizontal restraints are often unreasonable per se under federal antitrust principles, meaning they are deemed illegal without any inquiry into their anti- or pro-competitive effects. If a horizontal restraint qualifies as an "ancillary" restraint, it is analyzed under the rule of reason to determine if it is legal. To qualify as an ancillary restraint, the restraint must be subordinate and collateral to a separate, legitimate transaction.

Listen as our authoritative panel discusses the limits of restrictive covenants and how the current DOJ and FTC guidance is affecting enforcement and criminal liability for violations of anti-poaching and antitrust laws.

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Outline

  1. Anti-poaching provisions
    1. Definition
  2. DOJ and FTC guidance
  3. 2021 Biden executive order
    1. DOJ recent criminal cases
    2. Horizontal vs. ancillary restraints

Benefits

The panel will discuss these and other relevant topics:

  • What is the current FTC and DOJ guidance on anti-poaching?
  • When do anti-poaching provisions violate antitrust laws?
  • What are some current cases the DOJ has brought against companies for anti-poaching violations?
  • How can a restraint be seen as ancillary rather than horizontal?

Faculty

Fontana, Matthew
Matthew A. Fontana

Partner
Faegre Drinker Biddle & Reath

Mr. Fontana handles a variety of traditional labor matters for both public and private sector clients under the...  |  Read More

Rees, Thomas
Thomas D. Rees

Partner
High Swartz

Mr. Rees heads the firm's Litigation, Employment Law, and Education Law Practices. As an...  |  Read More

Rubin, Lee
Lee H. Rubin

Partner
Mayer Brown

Mr. Rubin is a civil and criminal litigator with extensive experience in private practice and in the government, where...  |  Read More

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