In 2010, the US Department of Justice settled an investigation it had been conducting into non-solicitation agreements involving a number of Silicon Valley tech companies.
The DOJ had been investigating a variety of interlocking agreements between six companies (Adobe, Apple, Google, Intel, Induit, and Pixar) that prohibited them from soliciting one another's employees and which the DOJ said "eliminated a significant form of competition to attract highly skilled employees." The case settled on the basis that the companies would terminate any such non-solicitation arrangements.
More than 60,000 tech workers are now reported to be suing these companies, and a number of others. The tech workers claim that there was an overarching conspiracy to enter into illegal agreements not to hire each others' employees: a no poaching cartel. It is reported that Facebook declined to take part in the anti-poaching agreements. The trial is scheduled to begin in May.
In the EU, non-solicitation agreements of the sort alleged to have been put in place in Silicon Valley, would breach anti-trust rules. Such restrictions are generally only permissible where they are objectively justified in protecting legitimate commercial interests: for example, in the context of a business acquisition to ensure that the acquiring party is not denuded of key staff by the business vendor.
In that context, non-competition provisions (including non-solicitation clauses) should, save in exceptional circumstances, be limited as follows:
where goodwill only (customer relationships and customer loyalty) is being protected, they must persist for not more than two years;
where goodwill and technical know-how is being protected, they must persist for not more than three years.
If you would like to discuss these issues, please do not hesitate to contact us.
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