71 Am. U. L. Rev. 649 (2021).

Abstract

The last few years have seen the beginnings of what could become a radical revision of the law’s approach to restraints on competition in the labor market. While most attention has been focused on “noncompetes”—agreements between employers and their employees imposing postemployment restraints—there has also been a revival of interest in so-called “no-poaches”—agreements by which employers restrict their ability to hire each other’s workers. This new interest includes antitrust challenges and an enhanced skepticism by common law courts about enforcing such agreements. Indeed, as new laws increasingly limit the use of traditional noncompetes, no-poaches have become more attractive to employers and their legality a matter of increasing concern in terms of both overall employee mobility and the fairness of limiting worker opportunities without their knowledge or consent.

While the antitrust implications of such agreements have been noted, there has been little scholarship on the common law approach to no-poaches, and court decisions are inconsistent in both analysis and outcome. This Article addresses the common law issue and, in the process, urges a more focused review of no-poaches to narrow their effects in impeding employee mobility. Among other recommendations, it suggests a more skeptical view of supposedly legitimate employer interests in preserving their workforces from competition. And, even where such an interest exists, (1) state courts and legislatures should transplant new restrictions on traditional noncompetes to the no-poach setting; (2) at a minimum, courts should get out of the business of issuing injunctive relief barring the hiring of employees; (3) contractual liquidated damages and “conversion fees” should be limited to amounts consistent with the interests they seek to protect; and (4) no-poach agreements should be unenforceable when the employer terminates the relationship without good cause related to the employee’s performance.

* Professor of Law Emeritus, Seton Hall Law School. My thanks to Steve Willborn for trenchant criticisms, some of which was well-taken. Also, thanks to antitrust guru, Marina Lao, for her valuable insights.