April 29, 2017

April 28, 2017

Subscribe to Latest Legal News and Analysis

April 27, 2017

Subscribe to Latest Legal News and Analysis

April 26, 2017

Subscribe to Latest Legal News and Analysis

Employee “No-Poaching” Agreements Remain in the Antitrust Crosshairs

There have been a series of investigations, class action suits and high value settlements involving agreements not to solicit employees. In addition, the Department of Justice (DOJ) Antitrust Division made a splash a few months ago when it announced that it would criminally investigate and prosecute employers that engage in certain “naked” no-poach or wage-fixing agreements.

WHAT HAPPENED:

  • Employees filed a civil class action against the Carl’s Jr. hamburger chain because of a no-hire provision in its franchisee agreements.

  • The plaintiffs allege that Carl Karcher Enterprises (CKE), the franchisor, includes the no-hire provisions in its standard agreement to prevent its restaurants from hiring each other’s shift leaders. According to the complaint, the clause appears in the same part of the agreement that also prevents franchisees from competing for each other’s customers.

WHAT THIS MEANS:

  • The plaintiffs’ bar continues to view employee no-hire/non-solicitation agreements as a profitable area to bring class actions.

  • The DOJ’s policy guidance states that only “naked” agreements among employers will justify criminal enforcement. This means agreements that are not ancillary to some other joint competitive activity. Here, the restraint is arguably ancillary to operating a franchise chain.

  • Plaintiffs’ success likely will hinge on whether they can show that the agreement between the franchisor and its franchisees is really among separate entities rather than a single economic unit under the Copperweld

  • The Franchisor’s business justifications also are likely to be important as this litigation progresses.

  • Companies need to be sensitive to employment restrictions involving other employees such as non-solicitation or no-hire agreements.

© 2017 McDermott Will & Emery

TRENDING LEGAL ANALYSIS


About this Author

Mary Strimel, McDermott Law Firm, Merger and Acquisition Attorney
Partner

Mary Strimel advises and defends clients on mergers, acquisitions, criminal price-fixing, class actions and other antitrust investigations before the US Department of Justice, the US Federal Trade Commission, state and federal courts, and foreign competition authorities. Her criminal and civil antitrust work has spanned a wide range of industries, including transportation, software, financial markets, data publishing, chemicals, pharmaceuticals, glass, industrial products, alcoholic beverages, and telecommunications.

Mary was an attorney with the DOJ Antitrust...

202-756-8249
Jon B. Dubrow, Corporate Lawyer, Mergers and Acquisitions Attorney, McDermott Law
Partner

Jon B. Dubrow is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C. office.  He focuses his practice on defending mergers, acquisitions and joint ventures before the Department of Justice, the Federal Trade Commission and foreign competition authorities, as well as antitrust and commercial litigation.  Jon also provides counseling on distribution issues and a wide variety of other competition-related matters.

202-756-8122
Gregory E. Heltzer, Mergers and Acquisitions Lawyer, Antitrust Attorney, McDermott Will Emery, Law Firm
Partner

Gregory E. Heltzer is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C., office.  He focuses his practice on defending mergers and acquisitions before the Federal Trade Commission, Department of Justice, state antitrust authorities and foreign competition authorities.  In addition, his practice also includes complex antitrust litigation, government investigations and antitrust counseling (e.g., advising agricultural cooperatives on the requirements of the Capper Volstead Act).

202-756-8178