In Pittsburgh Logistics Systems, Inc.c. BeeMac Trucking, LLC, the trial court found that the non-hiring clause was unenforceable because it prevented individuals from seeking employment at certain companies even if those individuals had not consented to the restriction or had been compensated for it. It is important to note that Pittsburgh Logistics Systems (“PLS”), the company that is trying to enforce the restrictions against BeeMac, failed in a separate lawsuit to enforce the restrictive agreements contained in the employment contracts of four employees, each of whom went to BeeMac to work at BeeMac. The Court of First Instance concluded that the contract, in order not to compete, was punitive and excessively broad, since it had an unlimited geographical scope. The court considered the PLS to be “dirty hands” and refused to enforce the restriction. One. The legality of any non-poaching agreement must be assessed on the basis of the specific and often unique facts of each situation. Do not assume that because a non-poaching agreement was considered a “secondary intent” in one case, it will also be considered an ancillary agreement in other circumstances. These analyses are best entrusted to an experienced antitrust advisor.

Second, the court concluded that “the non-hiring clause undermines free competition in the labour market in the shipping and logistics industry, creating a probability for the general public.” The court cited an article in the Law Review that refers to studies suggesting that wages are higher in states that do not recognize or enforce restrictive agreements against workers. The Court applied a balancing test in which PLS`s interests were weighed against the excessive scope of the non-hiring clause and the likelihood of harm to the public, and concluded that the non-hire clause was inappropriate and unenforceable. While the court didn`t make a full decision or give insight into how it weighed each of these facts, its analysis still offers some hope and guidance for Pennsylvania employers trying to enforce non-hiring regulations. One. In some cases, yes. For example, if a no-poaching agreement is part of a separate and legitimate business transaction or other pro-competitive cooperation, the courts will consider whether the no-poaching agreement is reasonably necessary to “make the main transaction more efficient in achieving its purpose.” [3] Such “ancillary solicitation agreements” may be permitted, for example, if necessary to promote an otherwise pro-competitive concentration or to make an R&D joint venture more efficient. But even in these cases, antitrust law requires that non-poaching agreements be tailored to both scope and duration. Non-poaching agreements that apply to entry-level or junior staff are unlikely to pass the antitrust review. The same applies to non-poaching agreements, the duration of which is not sufficiently limited. Non-poaching agreements can include everything from general no-hire agreements to less restrictive agreements, such as promises of . B not to coldly call other people`s employees (or work with headhunters), or even the assignment of job fairs between competing employers.

A non-solicitation agreement can also be used at the beginning of a commercial venture to prevent an employee – for example, a hairdresser who will soon bring a number of new customers to your salon – from taking those customers with them when they leave. A solicitation ban may be requested at the beginning of the employment relationship or at the end of a business relationship. In California, the wording must be narrow and the agreement must be reasonable in nature to be considered legally binding. For this reason, no-hire agreements are difficult to enforce in California. The court had a clear opportunity to declare pennsylvania`s no-hire provisions unenforceable. She chose not to. Other courts across the country that have removed non-employment contracts that are subordinate to the subject matter of the underlying contract have also done so based on a more nuanced analysis, rather than declaring such provisions in themselves unenforceable. In any case, companies should avoid entering into agreements or arrangements with other companies about their current or potential employees without first seeking the advice of an experienced antitrust lawyer.

The Supreme Court upheld the trial court`s finding that the non-hiring agreement was unenforceable because non-hiring agreements between companies unduly prevent employees from seeking employment in certain companies without giving employees consideration or obtaining their consent. Employers can continue to enter into prohibitions on poaching and non-competition with their employees. However, employers cannot rely on a no-hire agreement with another employer to limit their employees` ability to seek alternative employment. Takeaways: Determine if there are any factors unique to your industry or geographic region that minimize the impact of your non-hire offer on the job market, and be prepared to highlight them. One. A no-poaching agreement is essentially an agreement between two companies, not to compete for each other`s employees, e.B. by not recruiting or hiring them. Agreements between companies that restrict or otherwise establish the terms and conditions of employment of current or potential employees may violate antitrust laws if the agreement restricts the company`s independent decision-making regarding wages, salaries, benefits, terms and conditions of employment, or employment opportunities. An agreement or arrangement between two companies, which are not competing for potential employees, is a classic no-poaching agreement. These recruitment bans are different from traditional non-compete obligations. With a non-hiring clause, the employee`s future employment is limited not by his own agreement, but by an agreement between two other parties.

While the court`s own analysis has been short compared to its lengthy dissection of cases across the country, it provides valuable advice — and perhaps a little optimism — to employers looking to draft and enforce no-rent agreements in Pennsylvania and beyond. Here are five takeaways from an analysis of this case. The court held PLS responsible for drafting an excessively broad non-hiring provision. The agreement prohibited Beemac from hiring a DCS employee for the duration of the contract and for two years thereafter. It was not limited to PLS employees working with Beemac. It wasn`t even limited to employees working at PLS while the contract was in effect. Taken to the extreme, any employee hired by PLS one year after the termination of the contract with Beemac could not be hired by Beemac for at least one year. The California Court of Appeals struck down a non-hiring provision for similar reasons in VL Systems, Inc.c. Unisen, Inc., noting that the provision applied to all of the plaintiff`s employees, whether they had previously worked with the defendant subcontractor or were even employed when the underlying contract was in effect.

Non-hiring and non-solicitation agreements are similar, although non-hiring agreements are sometimes made between companies, so competing companies cannot hire employees from another. In most cases, there is a time limit for such agreements, and they can no longer be applied after the expiry of this period. Differences between non-hiring and non-solicitation agreements From an antitrust perspective, companies competing to hire or retain employees are competitors in the labour market, whether the companies manufacture the same products or compete to provide the same services. It is illegal for competitors to expressly or implicitly undertake not to compete with each other, even if they are motivated by the desire to reduce costs. The court left open the possibility that a more tightly tailored no-hire agreement could still survive. Although the non-hiring provision prepared by PLS failed, employers in Pennsylvania and across the country should use the court`s analysis for what it is – a general guide to the regulatory approach to the hiring ban: As in other states, the court established a balancing test for the applicability of non-hiring provisions in Pennsylvania. You don`t have to gain from every factor. But you can use court analysis to design no-hire regulations that tip the scales in your favor if you`re ever in the same position as PLS. This is the first crucial question and by far the simplest part of the analysis. The court clarified that non-employment agreements, like all other restrictive agreements, are void unless they are ancillary agreements to an otherwise valid contract. The courts will not enforce a simple no-hire agreement between two competitors who are simply trying to stifle competition. These are the types of deals that the U.S.

Department of Justice has aggressively targeted in recent years, and there is little room for them in Pennsylvania or elsewhere in the United States. Contracts with health care professionals often include a provision in which one party agrees not to hire the other party`s employees. For example, such a “no hire” clause could appear in an agreement between a hospital and a group of doctors occupying the hospital`s emergency room, or between a hospital and a temporary nursing agency. .