No-Hire, Non-Hire Clause/Agreement

Agreement akin to a non-solicitation agreement where a party (usually a company disposing of a business or a departing senior manager) agrees not to hire specified persons. Thus, for example a large company selling part of its business to another might agree for a period of time not to hire any of the employees who changed employers in the transaction. They are sometimes also found in contractor agreements.

Although such clauses have the immediate facial advantage that a violation is easily provable as compared to a non-solicitation provision, they may be more difficult to enforce as they affect the interests of a third party, the prohibited-from-hiring employee, who is not a party to the no-hire clause or agreement. No-hire agreements may need a large number of exceptions (i.e., excluding employees who have left the previous employer in various ways) to make them legal defensible and non-solicitation agreements are usually more legally and ethically defensible.

No-hire agreements, when designed to prevent potential employers from making job offers at higher pay rates can raise serious antitrust and competition law issues. This was notably the case with respect to an informal but now infamous Silicon Valley non-solicitation agreement and no-hire arrangement which resulted in $324 million settlement (against potentially vastly greater liability) in 2014.

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