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DOJ Vows Criminal Prosecution of Employee "No Poaching" Agreements

    Client Alerts
  • September 27, 2017

A few years ago, several Silicon Valley employers made news when they were accused of agreeing among themselves not to solicit each other’s programmers and software engineering employees. These employees are in high demand, and the alleged agreements were viewed as attempts to avoid salary battles as well as expenses involved in recruiting for employees who departed for another tech company.

Earlier this month, the federal Department of Justice reiterated comments made during the Obama administration with regard to its view of this behavior. The acting head of DOJ’s Antitrust Division reminded companies that these types of agreements constitute per se violations of federal antitrust laws and subject the companies and executives involved in such agreements to criminal prosecution. He noted that these agreements have the effect of illegally suppressing employee compensation by preventing them from leveraging their skills for higher wages.

These comments make clear the Trump administration’s intent to continue prior enforcement policy with regard to “no poaching” agreements. Human resource professionals and in-house counsel should remind company executives about the corporate and personal legal risks involved in making these kinds of deals with other employers.