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While companies are always on the hunt for new talent, attorneys and human resource experts warn that businesses could find themselves in legal trouble if their efforts become too aggressive and evolve into poaching.
Among the potential pitfalls are violations of an employee’s work agreement with his or her former employer and improper solicitation of the employee’s former co-workers, experts say.
“It’s one thing to lose an employee to a competitor,” said Nicole Belyna, manager, recruitment and recruitment strategy at Thompson Creek Window Co. in Lanham, Maryland. “It’s another thing when you lose an employee to a competitor and they bring propriety information along with them — or they take the manager, and they bring the whole team with them.”
Ms. Belyna, who also serves on the talent acquisition panel for the Society for Human Resource Management in Alexandria, Virginia, added that “doing your homework on the front end before you even extend the offer is important.”
The insurance industry is no stranger to poaching lawsuits. In March 2017, Lake Mary, Florida-based brokerage AssuredPartners Inc. agreed to pay Brown & Brown Inc. $20 million after hiring away eight workers in violation of their employment agreements. AssuredPartners was also restricted from hiring anyone in its Daytona Beach and Orlando, Florida, offices for 18 months, and nationally for six months.
Also last year, a jury in California found that a group of 10 former Aon P.L.C. brokers did not breach their fiduciary duty to the brokerage when they left Aon to join rival Alliant Insurance Services Inc. in 2014 and were later followed by a team of more than 60 other Aon employees.
Ken Sulzer, managing partner at Constangy, Brooks, Smith and Prophete L.L.P. in Los Angeles, said employers are allowed to hire workers from competing firms in a free market. However, there are some conditions.
“The question is, do you give false, misleading types of information about the person’s company that you want them to leave,” he said. “Did you do other things to sabotage the relationship that would be illegal or unfair?”
Mr. Sulzer advised employers to review any agreements prospective employees may have with their current employer. Make certain they do not contact any of their friends at the current company and warn them in writing to return any documents from that company or let management know about the situation, he said.
“The employee should not be soliciting and calling up employees from the other firm,” he said.
“They should not be texting them, emailing them or calling them, and they should certainly not be creating any record of unexplainable contacts with employees at the old company, because you’ll run into a potential solicitation issue.”
“I think the word ‘poach’ has a negative connation,” said Dean Harvey, a partner with Lieff Cabraser Heimann & Bernstein in San Francisco. “But if you ask what is actually happening, it’s an employer hiring an employee from a current employer somewhere else, which is a good thing generally.”
Laws regarding noncompete agreements vary by state, Mr. Harvey said.
“If a company has offices all over the country there can be many different standards that apply to different offices, and you have to be really careful about it,” he said. “There’s a balance there between protecting the employer’s interest and protecting the employee’s right of mobility. Usually that means there has to be a time limit — it’s not perpetual. There’s usually a geographic limit.”
In 2010, several Silicon Valley companies, including Apple Inc., Google Inc. and Adobe Systems Inc., got into trouble with the U.S. Department of Justice when they were accused of collusion to refrain from recruiting each other's employees. The companies settled with the government; Adobe, Apple, Google, and Intel Corp. reached a $415 million settlement in a civil lawsuit.
“There were serious allegations that a lot of those companies agreed not to solicit and actually not to hire one another’s employees,” said Steve Libowsky, a partner with Dentons US L.L.P. in Chicago. “Companies and HR professionals can’t agree to leave other companies’ employees alone. That’s antithetical to free markets.”
In October 2016, the department and the Federal Trade Commission issued Antitrust Guidance for Human Resource Professionals, a document intended to alert human resource professionals and others involved in hiring about potential violations of antitrust laws.
Employers who a looking to repel poaching attempts are advised to pay attention to what’s going on around them.
“You have to wonder why somebody wants to go a competitor,” Ms. Belyna said. “Somebody goes to a competitor because they’re not getting something where they are. So that’s where employee engagement comes in.”
“My advice is that if you want to keep your employees, treat them well,” Mr. Harvey said. “What a concept.”
Brown & Brown Inc. will receive $20 million in a settlement of litigation over a rival’s hiring several of its employees, the broker said Thursday.