Here at the Law Office of Vincent Miletti, Esq. and the home of the #UnusuallyMotivated movement, we take pride as a resilient and dependable legal services firm, providing such services in both a traditional and online, web-based environment. With mastered specialization in areas such as Employment and Labor Law, Intellectual Property (IP) (trademark, copyright, patent), Entertainment Law, and e-Commerce (Supply Chain, Distribution, Fulfillment, Standard Legal & Regulatory), we provide a range of legal services including, but not limited to traditional legal representation (litigation, mediation, arbitration, opinion letters and advisory), non-litigated business legal representation and legal counsel, and unique, online legal services such as smart forms, mobile training, and legal marketing & development.

Still, here at Miletti Law®, we feel obligated to enlighten, educate, and create awareness about how these issues and many others affect our unusually motivated® readers and/or their businesses. Accordingly, to achieve this goal, we have committed ourselves to creating authoritative, trustworthy, and distinctive content that looks to educate and deliver in a manner that only Miletti Law® can. Usually, this content is featured as videos posted on our YouTube Channel https://www.youtube.com/channel/UCtvUryqkkMAJLwrLu2BBt6w and blogs that are published on our website WWW.MILETTILAW.COM. With the ball in your court, yours is an effortless obligation to subscribe to the channel and sign up for the Newsletter on the website, which encompasses the best way to ensure that you stay in the loop and benefit from the knowledge bombs we drop here!

As the authoritative force in Employment Law, we are committed to providing you with authoritative, up-to-date, and trustworthy content through which you can draw enlightening information to stay ahead of the game in your business. In this regard, this blog, titled “Preventing Employee Raiding Through “No-Hire Agreements,” is Part XVIII of our multi-part series on the “Enforcement of the Protection of Employers’ Confidential Information & Trade Secrets.” In Part XVII, we hammered on the concept of “employee raiding” and how it can be prevented to protect trade secrets and mentioned that while the primary intention is to acquire the confidential information known by employees, employee raiding refers to the practice where employees are unlawfully induced to leave one employer and accept employment with another employer. We added that since it is impossible to prevent employee raiding entirely, employers should take and implement measures and policies that would help to curb employee raiding in a bid to protect trade secrets and/or confidential information and retain employees.

As a way of continuing with this discussion, we now focus on the concept of “No-Hire Agreements” in this blog and Part XVIII of our series.

Preventing Employee Raiding Through “No-Hire Agreements”

At times, in attempts to protect their confidential information and/or trade secrets, competitors agree that they will not poach each other’s employees by signing and entering into “no-poaching” or “no-poach” covenants known as “no-hire agreements.” However, pursuant to 15 U.S.C. § 1, employers (competitors) should be aware that such “no-poaching” or “no-poach” agreements may or may not be enforceable as restraints under the Sherman Act.

Ideally, the Sherman Act (15 U.S.C. § 1) provides that any “combination or conspiracy to monopolize, attempted monopolization, or actual monopolization,” and “every conspiracy, combination, or contract in restraint of trade” is per se illegal. However, as mentioned above, the Sherman Act prohibits only unreasonable restraints and not every restraint of trade, as ruled by the Supreme Court years ago. While it may comprise some level of reasonableness and, therefore, may be lawful under the Sherman Law, a good example is an agreement between two entities to form a merger. However, this does not imply that trade is not restrained.

Usually, courts may typically deem covenants not to compete for employees valid when such agreements are reasonably limited in scope for or ancillary to a legitimate business contract. However, no-hire agreements would be considered naked restraints on trade when they are not reasonably limited in scope and/or not ancillary to a lawful employment contract. This implies that employers (competitors) should consider whether no-hire agreements are (1) reasonably limited in scope for and/or (2) are ancillary to a legitimate business contract to make them enforceable as restraints under the Sherman Act.

In Part XIX, we will conclude this series by hammering on how to approach and combat incidents of employee raiding once they occur in our last blog titled “Dealing with Employee Raiding Once It Happens.”

Until then, stay tuned for more education, training, and legal guidance. In the interim, reach out to us with questions and/or comments on our website at the Contact Us page!

Always rising above the bar,

Isaac T.,

Legal Writer & Author.