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Regulators in New York, other states focus on anti-poaching pacts

On Behalf of | Sep 7, 2018 | Business Litigation |

It certainly makes sense from an employer’s perspective. Business owners and managers in New York and elsewhere generally spend a lot of time and money to adequately train new workers. Unquestionably, that is an investment worth protecting, especially against raiding attempts from rivals seeking to score top-tier talent on the cheap.

So-called “anti-poaching” agreements have long been common across the country to counter employers’ fears concerning summary exits by workers, coupled by immediate employment with a competitor. Poaching language is generally inserted directly into employment contracts.

And it is common. A recent article on anti-poaching underscores research indicating that close to 60% of America’s biggest franchising entities routinely insert no-poach provisions into their agreements with employees.

There is strong and growing momentum against such language and attendant restrictions, though. That above-cited percentage is likely to go down far and fast, spurred by major franchisors’ growing fears concerning anti-poaching litigation backlash.

Commentators say that such a fear is well placed, with both criminal and/or civil penalties under federal law being likely outcomes for companies that persist in their attempts to stifle worker mobility and keep wages low.

A progressively stiff and uncompromising message is being sent by regulators to franchisors, with principals of those companies clearly listening. Reportedly, major business players like McDonalds, Arby’s, Jimmy John’s and IHOP recently agreed to strike anti-poaching language from their franchise contracts.

Franchisors with questions or concerns regarding what is clearly a regulatory hot button issue might reasonably want to consult with experienced business law attorneys. Proven commercial lawyers can review relevant contracts and help implement new – and safer – legal strategies addressing employment matters and company protections.