On May 1, 2014, tech-giant, E-Bay, Inc. (“E-Bay”) entered a proposed agreement with the United States Department of Justice (“DOJ”) and California antitrust regulators to settle antitrust claims arising out of its “no-poach” agreement with Intuit Inc. (“Intuit”).  The challenged agreement prevented each firm from recruiting employees of the other, and prohibited E-Bay from hiring Intuit employees that approached E-Bay for employment.  Subject to court approval, the proposed settlement with the DOJ enjoins the challenged agreement, and more broadly prohibits E-Bay for a period of five years from entering into any agreement that would prevent a person from soliciting, cold-calling, recruiting, hiring or otherwise competing for employees.  In addition to these restrictions, the proposed state settlement requires E-Bay to pay $3.5 million into a settlement fund designed, in large part, to provide restitution to injured California employees.
    
This recent settlement is the latest step in a series of antitrust actions challenging similar “no-poach” agreements among Silicon-Valley technology companies, and presents a cautionary tale to manufacturers and distributors concerned about the raiding of their employees by competitors.  While employers are permitted in most states to enter reasonably tailored non-competition and/or non-solicitation agreements with their employees, direct agreements among competitors not to solicit or hire each other’s employees can present significant antitrust risks.  Often in the wake of expensive litigation involving the enforcement of vertical employee non-compete agreements, parties consider including horizontal “no-poach” provisions in their settlement agreements.  As demonstrated by the recent E-Bay ruling, litigants should carefully consider the antitrust risks associated with and seek antitrust counsel regarding such provisions.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents.