No-Poaching Agreements

No-Poaching Agreements

Concentration on labour market demand is not part of the traditional centre of gravity of competition policy. However, as explained above, non-poaching agreements can effectively harm competition in the labour market. In the United States, this prejudice has been at the centre of some recent cases; In Europe, it is not yet known whether competition authorities will consider such cases or whether labour market problems will remain secondary to product market investigations. [13] However, non-poaching agreements often involve skilled workers whose contractual terms already exceed minimum labour law standards. Employers who enter into non-poaching agreements with their competitors continue to risk civil and criminal liability for cartels and abuse of dominance. In addition, employers who have contractual non-employment or non-recruitment agreements with their employees run the risk that these provisions will be found to be unenforceable. For employers, especially those in Indiana, it is essential to review these agreements and, if necessary, update them. In the spring of 2018, Senators Cory Booker (D-NJ) and Elizabeth Warren (D-Mass) introduced legislation called The End Employer Collusion Act to “prohibit employer-to-employer agreements that directly limit the current or future employment of a worker.” In their bill, franchise agreements are explicitly cited as objectives of the legislation. In addition, senators sent letters to nearly 100 franchised CEOs from a wide range of industries asking them not to enter into any more agreements, asking for information on each company`s practices in this area.

Wage-fixing agreements, such as price agreements, are a violation of cartel and abuse of dominance rules. This applies not only to literal wage agreements, as an agreement not to pay above the minimum wage, but also to many agreements that lead to the abolition of wages. This category includes no-poaching agreements and agreements not to go to employees of other companies to hire them. Implementation of this type of activity began mainly in 2010 in high-tech worker litigation and has grown since then through implementation in many other sectors. To determine whether such agreements are contrary to competition, one must understand the balance of power in the wage negotiation process and the extent to which one party can exploit the other. This merits a specific discussion on the framework and principles to be applied to such an analysis. Companies are generally considered “buyers” of workers and workers as “suppliers.” Non-poaching agreements allow several companies to coordinate their labour purchases in order to increase their purchasing power and thus reduce their labour costs. By agreeing not to compete with certain categories of workers, these agreements can be considered similar to a horizontal market allocation. [3] The U.S. Department of Justice (DoJ) recently announced that it will actively investigate non-poaching and wage agreements between employers. The DoJ stated:[4] Non-competition obligations are applied differently (or not at all) depending on a number of factors, including national law, the restrictive nature of the conditions and the companies considered competitive. If your company is currently using an NCC (or considering implementing it) when employees are hired, here are a few questions: These DOJ warnings are not inactive threats.

The DOJ has filed civil suits against several tech giants.