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Pennsylvania Supreme Court Voids No-Hire Provision In Service Contract Between Two Employers - Employment and HR

To print this article, all you need is to be registered or login on Mondaq.com. Q: I heard that companies entering into commercial contracts in Pennsylvania can no longer restrict each other from hiring their employees. Is that true? A: On April 29, the Supreme Court of Pennsylvania held in Pittsburgh Logistics Systems, Inc. v. Beemac Trucking LLC, et. al. that a no-hire provision (commonly referred to as a “no-poach” provision) in a service contract between two business entities was unenforceable as an impermissible restraint of trade because it was overbroad and created a likelihood of harm to nonparties to the

3rd Circuit in PA Logistics Case Rules Agreement Unenforceable

Tuesday, June 1, 2021 As reported here and here, in December 2019 and January 2020, the United States Department of Justice brought its first criminal charges against employers who entered into “naked” wage fixing agreements and no-poach ( e.g., non-solicitation and/or non-hire)  agreements with competitors. According to DOJ’s 2016 Antitrust Guidance for HR Professionals, such agreements are “naked,” and, therefore, illegal  per se, because they are “separate from or not reasonably related to a larger legitimate collaboration between competitors .”  Although DOJ recognized that such agreements may not be illegal  per se when made in furtherance of legitimate joint ventures or business, it provided scant guidance on what it would deem to be a legitimate joint venture or collaboration.  The Pennsylvania Supreme Court recently addressed the issue in 

Avoid Broad No Poaching Agreements With Clients | Parker Poe Adams & Bernstein LLP

To embed, copy and paste the code into your website or blog: A business’s employees are among its most valuable assets. Companies that provide professional services often run the risk that their clients may poach their employees. Think of information technology service providers, engineering firms, marketing companies, and staffing firms. In order to prevent clients from hiring away personnel, many service contracts contain “no poach” or “no hire” provisions which restrict the client from hiring away the service provider’s employees. A recent decision of the Pennsylvania Supreme Court serves as a reminder that the enforceability of such provisions is far from guaranteed. In

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