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Are Anti-Poaching Agreements on the Way Out? — Elmhurst and Oak Brook Non-Compete Agreement Lawyers

A free market requires a free labor market, and yet many of the politicians who claim a free market as a central component of our democracy actively work against the formation and maintenance of a free labor market.

A free labor market means workers are free to work for the companies they want to work for, doing the kind of work they want to do, but many companies have been using things like non-compete agreements and anti-poaching restrictions to keep workers from leaving to work for competitors.

The problem with such restrictions is that a labor market in which employees have more options is a more competitive labor market. When employees have the option to leave to work for another company that’s offering them more money, they have the opportunity to either leave their current employer in favor of higher wages or to stay and negotiate higher wages with their current employer. More freedom means more bargaining power, but companies have been actively working to restrict that freedom – and by extension, that bargaining power.

Anti-poaching restrictions have become the latest method companies have used to try to keep employees right where they want them. Fast food restaurants, in particular, have been using anti-poaching clauses in their contracts with franchisees in order to make sure franchisees don’t poach employees from each other. Such clauses usually forbid franchisees from hiring applicants who are current or recent employees of the parent company or any of its other franchisees without the express permission of the current or previous employer.

Experts estimate that about 80% of fast-food restaurants include anti-poaching clauses in their franchise contracts, but they’re hardly the only ones. They’re also fairly widely used in temp agencies, as well as a variety of other industries.

But the laws are starting to catch up to such controlling practices, and legislators have already taken steps to put a stop to such anti-free-market practices. Several states have started proposing laws that ban such practices, and even some legislators at the federal level have introduced bills to outlaw these kinds of agreements. Just this year, legislation was introduced into Congress by Cory Booker, Elizabeth Warren, and Keith Ellison that would prohibit anti-poaching agreements and give the Federal Trade Commission the power to enforce it, and other labor laws governing businesses in the United States.

But while the federal Congress and various states are looking into passing laws to restrict this kind of behavior, Illinois is already ahead of most of them. In 2002, the “Broadcast Industry Free Market Act” was passed in the Illinois Congress, making it illegal for any radio, TV, or cable station to require employees to sign a non-compete agreement as a condition of employment. Sales and management roles were excluded from the prohibition.

In 2017, the “Illinois Freedom to Work Act” went into effect, making non-compete agreements illegal for any low-wage worker, regardless of what industry they work in.

While the strides being made across the country should always be encouraged, it’s worth noting that state laws exist for a reason and that if Illinois experiences higher wages and productivity after passing laws that prohibit anti-poaching agreements, there may be a connection.

Our Naperville non-compete agreement attorneys have defended high-level executives in covenant not to compete and trade secret lawsuits. A case in which our firm defended a former Motorola executive was covered in Crain’s Chicago business. You can view that article by clicking here.

Our firm of Chicago business dispute attorneys handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat. Our Chicago business lawyers with offices near Wheaton, Oakbrook Terrace and Schaumburg have substantial experience in restrictive covenant and breach of contract cases, and we are proud of our record of strong results.

DiTommaso Lubin Austermuehle a Chicago business litigation law firm represents both plaintiffs and defendants in such cases, and can also help stop litigation before it starts by reviewing contracts to look for covenants and clauses that could create problems later. Based in Oakbrook Terrace and downtown Chicago, our Willowbrook and Hinsdale non-compete clause lawyers take cases from LaGrange, Burr Ridge and many other cities throughout Illinois, as well as in Indiana, Wisconsin and the entire United States. To learn more or set up a free consultation, please contact one of our Chicago business dispute lawyers through the Internet or call toll-free at 1-877-990-4990 today.