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In a decision resolving a dispute that has been pending for nearly five years, the Supreme Court of Pennsylvania just voided a no-hire provision entered into by two companies that bound one of them from hiring former employees of the other’s business. While the April 29 decision in
Pittsburgh Logistics Systems, Inc. v. Beemac Trucking, LLC did not hold these no-hire agreements – sometimes referred to as no-poach agreements – to be
per se unenforceable under Pennsylvania law, it identified several important factors that employers must consider before entering into contracts that place restrictions on the movement of their employees. This article provides you with a seven-step plan to consider in order to maximize your chances of success in this area.
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The state Supreme Court agreed with the Superior Court s
determination, concluding that the no-hire provision at issue is unreasonably in restraint of trade and therefore
unenforceable.
In its April 29, 2021, opinion,
Pittsburgh Logistics
Systems v. Beemac Trucking,?A.3d?, No. 31 WAP 2019, 2021 WL
1676399 (Pa. Apr. 29, 2021), the Supreme Court of Pennsylvania
weighed in on whether no-hire, or no-poach, provisions
that are ancillary to a services contract between business entities
are enforceable under Pennsylvania law. The court declined to hold
such provisions
per se unenforceable. Its
answer for the clause at issue, however, was a resounding
To embed, copy and paste the code into your website or blog:
The Supreme Court of Pennsylvania recently held unenforceable a no-hire provision in a service contract between a logistics company and a trucking firm. In
Pittsburgh Logistics Systems, Inc. v. Beemac Trucking LLC, et. al., the court reasoned that the no-hire provision at issue was overly broad and undermined fair competition for employees in the shipping and logistics industry.
Background
The case was between Pittsburgh Logistics Systems, Inc. (PLS), “a third-party logistics provider that arranges for the shipping of its customers’ freight with selected trucking companies,” and Beemac Trucking, LLC, one of the trucking companies it used. The two companies had entered into an agreement that prohibited Beemac from hiring any PLS employees. Beemac nonetheless hired four of PLS’s employees in violation of the no-hire provision.
Monday, May 3, 2021
The Pennsylvania Supreme Court recently held that a contractual no-hire or “no poach” provision in a services contract between sophisticated business entities is not enforceable under the laws of the Commonwealth of Pennsylvania. This important case is entitled
Pittsburgh Systems, Inc. v. Beemac Trucking, et. al., case no. 31 WAP 2019.
On August 30, 2010, Plaintiff, Pittsburgh Logistics Systems, Inc. (PLS) a third-party logistics provides that arranges for the shipping of its’ customers’ freight with selected trucking companies entered into a written agreement with Defendant, Beemac Trucking (“Beemac”), a shipping company that conducted non-exclusive business with PLS. That contract contained both non-solicitation and no-hire provisions. While that contract was in force, Beemac hired four PLS employees, who were not parties to the agreement between these two sophisticated entities.
While the Pennsylvania Supreme Court unanimously deemed a broad no-poach agreement between two companies void as a matter of public policy Thursday, attorneys say the justices left the door open for employers to respond with more narrowly tailored provisions designed to pass legal muster.