7 - No-Poaching Agreements

Summary

This chapter deals with agreements among rivals not to hire one another’s employees. These agreements are known as “no-poaching” agreements and have been found in a number of labor markets. There have been numerous instances of employers agreeing to refrain from hiring one another’s employees. This, of course, depresses the demand for these employees and thereby puts a lid on compensation. In this chapter, we review some prominent cases involving (1) hardware and software engineers, (2) digital animators, (3) medical school faculty, (4) physical therapists, and (5) professional athletes.

For the most part, the suits filed by the Department of Justice have been resolved. Many of the private suits filed by the antitrust victims have been settled, but some are still pending. The chapter also explores the enforcement policies of the antitrust agencies which are provided in the Antitrust Guidance for Human Resource Professionals. We will also provide an extended analysis of no-poaching agreements in professional sports.