Word to the Wise: Pennsylvania No-Hire Agreement Found Unenforceable
Last month we discussed national trends in non-compete law nationwide. One of the issues covered were “no poach” (a/k/a “no hire”) agreements. As a reminder: this is an agreement between two companies not to hire each other’s employees for a certain period of time. The last several years have seen increased scrutiny from the Department of Justice and The Federal Trade Commission, multiple States’ Attorney General and the plaintiff’s class action bar, but most of this attention has been paid to specific industries dominated by a small number of nationwide employers. Fast food has been the target, for the most part, with high profile cases against Papa John’s and Burger King garnering national attention.
2019 has already witnessed its first significant shift away from that trend, and right here in the Commonwealth of Pennsylvania, no less.
Last month, the Pennsylvania Superior Court, affirmed a trial court decision that a “no-hire” provision in a commercial contract between two companies violated public policy, and was thus unenforceable under Pennsylvania law. Pittsburgh Logistics Systems, Inc. v. Beemac Trucking, LLC and Beemac Logistics, LLC, No. 134 WDA 2017, 2019 Pa. Super. 13 (Jan. 11, 2019). Of significance to the Superior Court was the fact that the employees themselves may not have known about the agreement between their former employer and subsequent employer and that the similar restrictive covenant in their employment agreements with their former employer were found to be unenforceable by the trial court because it was “oppressive and/or an attempt to foster a monopoly.”
This was a case of first impression in Pennsylvania. Both the trial court and the Superior Court relied on what little case law exists on this subject from other jurisdictions. At present, only Wisconsin, California, Alabama and Illinois courts have published opinions on this subject. Wisconsin and California have found similar agreements to be void against public policy. Alabama and Illinois have considered similar agreements to be a permissible partial restraint on trade and, therefore, enforceable. We can reasonably expect many other states to weigh in on this issue in 2019 and beyond.
Employers will need to continue to be vigilant about changes in state non-compete and no hire laws in all of the states in which they have employees. Partnering with knowledgeable counsel to stay on top of these changes and modify existing policies and agreements is more important in 2019 than ever.
For more information on this topic, please contact Zachary Glaser at firstname.lastname@example.org or 267-338-1315.
ABOUT ZACHARY GLASER
Zachary Glaser | email@example.com | 267-338-1315
Zach Glaser, Chair of the Labor & Employment practice group, is also the head of the newly formed Employee Mobility practice at Offit Kurman. This specific practice consists of over 50 attorneys with Intellectual Property, Labor & Employment and Commercial Litigation backgrounds. This unique combination of attorneys in a group practice equip the firm to assist in both common and complex employee mobility legal issues. Zach’s broad litigation experience includes complex commercial matters, business torts, employment litigation and intellectual property disputes, including contract claims, defending employment discrimination claims, the enforcement of non-competition and non-solicitation agreements, federal and state unfair competition claims, defense of Fair Labor Standards Act claims, franchise and distribution disputes, lender liability and FINRA matters, professional negligence and medical malpractice defense, and all manners of intellectual property litigation, including trade secret matters, Computer Fraud and Abuse Act cases, e-commerce, trademarks, copyrights and patent litigation.
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