Skip to Content

Employment Law Antitrust Issues–Restrictive Covenants



Presentation to Fish Law Firm Internal CLE Lunch (January 19, 2021)

Overview of Antitrust Employment Law Claims:

  1. High Tech Employee Settlement:   A Settlement of $415,000,000 with Adobe, Apple, Google, and Intel in a class action lawsuit.  The complaint alleged that the conspiracy among defendants restricted recruiting of each other’s employees by allegedly making: (1) agreements not to recruit each other’s employees; (2) agreements to notify when making an offer to another’s employee; and (3) agreements that, when offering a position to another company’s employee, neither company would counteroffer above the initial offer.
  2.  VHS of Michigan, Inc. Class action brought by nurses alleging that Detroit-area hospitals entered into no-poach agreements; settled for $90 million.
  3. Franchise cases (Jimmy Johns, Burger King, etc)
  4. Department of Justice Enforcement Actions
    1. The Antitrust Division of the DOJ and the
      FTC issued “Antitrust Guidance for Human Resource
      Professionals”–disclosed intent to proceed criminally against
      these agreements because they allegedly eliminate competition.

Overview of Law:

–Designed to encourage competition. The level of analysis makes a key difference in the outcome:

Rule of Reason Analysis: Balances pro-competitive and anticompetitive effects.  Proof of market power/defining a relevant market.

Ancillary Restraints: Restraints that are “reasonably necessary” to a separate, legitimate, procompetitive—analyzed under the rule of reason.

Per Se Analysis: “Naked” no-poach and wage fixing agreements are per se illegal and subject to criminal penalties.  (anticompetitive presumed; no balancing of pro-competitive effects).

Issue Spotting:

  • Two unrelated employers agreeing not to hire each other’s workers
  • Unrelated employers agreeing not to bid against each other for hiring
  • Carving up the marketplace of customers.

For more information, see: “No More No-Poach”: An Antitrust Plaintiff’s Guide (