Do you wish to prohibit hiring or soliciting, or just soliciting, of certain employees, or do you wish to prohibit neither activity?

Restrictions on hiring have been subject to scrutiny under antitrust laws as well as under state common law of restraints of trade and state statutes that govern noncompetition provisions. See Callmann on Unfair Competition, Trademarks and Monopolies § 16:43 (4th ed. 2010).

Whether a no-hiring provision would survive such scrutiny depends on whether any legitimate business or policy reasons outweigh the burden on employees. California courts have declared no-hire provisions unenforceable.

No-soliciting provisions are less restrictive than no-hiring provisions. They’re also less anticompetitive than noncompetition provisions, but they’re subject to a similar sort of analysis. See Callmann on Unfair Competition, Trademarks and Monopolies § 16:44 (4th ed. 2010) For a California case in which the court held that a no-soliciting provision was enforceable, see Loral Corporation v. Moyes, 174 Cal. App. 3d 268 (1985).

In 2010 the U.S. Department of Justice sued several major technology companies for antitrust violations, alleging that the companies entered into a series of bilateral agreements not to cold call each others’ employees to fill employment openings. But such agreements can be distinguished from no-soliciting provisions agreed to in the context of a broader contract. The Department of Justice’s proposed settlement of its dispute with the technology companies suggests as much. See Silicon Valley Giants, Victims of their Own Success: DOJ Claims Otherwise Lawful ”No Cold Calling” Agreements Among Tech Heavyweights Violate the Sherman Antitrust Act, Bender’s California Labor & Employment Bulletin (Jan. 1, 2011).

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