Franchise Agreements – No Poaching Provisions

As written previously, if your company has agreements with no poaching employees language, it is new jurisdiction for the HR Manager or in-house employment counsel under anti-trust law.  Such provisions are typically found in franchise agreements where franchisees promise not to hire employees from other franchisees.  No poaching provisions have attracted the attention of the DOJ and states’ Attorneys General under the “very naughty” category.  Whether to keep poaching language should be addressed at the highest levels of your company.  A recent Order out of the Southern District of Florida however dismissed a class action against Burger King because the Court found that the Burger Kind franchisees were not sufficiently “separate economic actors”, but more like subsidiaries.  (See, Order).

Non-Compete Agreements – Applicable State Law

Non-competes are controlled by state law.  The favorableness toward enforcing non-competes among the states ranges from can’t to can relatively easily. For employers with multi-state locations, selecting the right state’s law can be the difference in enforceability.  A recent decision from the 3rd Circuit Court of Appeals, refused to enforce a non-compete which clearly indicated that employer favorable Delaware law applied. The Court’s rationale was that because the non-competes were signed and allegedly violated in Nebraska (which prohibits enforcing non-competes), Nebraska had a “materially greater interest” in having its law take priority.  See, Cabela’s LLC v. Highby, 801 Fed. Appx. 48 (3d Cir. 2020).

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