Current State of “No-Poach” Provisions

By Kristen M. Smith

This week, our Labor and Employment group published a legal alert, linked here, regarding a Pennsylvania Supreme Court ruling that held a “no poaching” agreement between two companies to be unenforceable and in violation of public policy.

No-poach provisions, which prohibit parties from hiring each other’s employees, have been a hot topic in franchising for the past few years and particularly since 2018, when the State of Washington launched an investigation into the use of such provisions in franchise agreements. Washington’s investigation resulted in the state requesting many franchisors to eliminate such provisions from their franchise agreements and to stop their enforcement nationwide.

This latest ruling out of Pennsylvania was not related to franchised businesses, but nonetheless could be an indicator of how states may follow Washington’s lead, in the franchise space and otherwise, with respect to outlawing these types of provisions.

For more information about the about the use of no-poach provisions in franchising agreements or otherwise, please contact us.