Anti-Raiding Agreements

One of the hardest things for a business to overcome is the loss of its workforce. This is particularly true in industries where employers must provide long, costly training to employees in order to get them up to speed on how to perform their jobs. After investing substantial time and energy into training an employee, an employer does not want to lose that employee to a competitor who will reap the benefits of the employer’s investment.

In an effort to prevent or stem personnel drain, some employers include anti-raiding provisions (also referred to by courts sometimes as anti-poaching or non-solicitation agreements) in their employment agreements or employee handbooks. An anti-raiding agreement in broad terms is a provision that prohibits former employees from inducing other employees to leave the former employer to join or form a competing business. Although the issue has not been heavily litigated in Illinois courts, the general consensus reached by the courts that have considered the issue is that such provisions are enforceable because employers have an interest in maintaining a stable workforce. As with all restrictive covenants under Illinois law, the duration of the anti-raiding provision must be “reasonable” in order to be enforceable.

The seminal case in Illinois on the issue is Arpac Corp. v. Murray, 226 Ill. App. 3d 65 (1st Dist. 1992). In Arpac, the court upheld a restrictive covenant prohibiting a former employee from poaching the employer’s other employees. The court reasoned that the restriction was reasonable because an employer has a “legitimate business interest” in maintaining a stable work force.

Anti-Raiding Agreements and Unfair Competition

An employer whose employees are being raided by a rival may have a claim not only against its former employee for breach of his or her anti-raiding agreement but also against the rival for unfair competition, particularly where the rival is intentionally inducing the resignations of key employees to gain access to the employer’s trade secrets and other confidential information.

While simply hiring the current or former employees of a competitor is perfectly legal, unfair competition claims arise when a company engages in the systematic inducement of multiple employees of a single competitor to leave their present employment when such inducements are intended to destroy the competitor or an integral segment of that competitor’s business.

When a company uses an employee subject to an anti-raiding provision to do the poaching, the company opens itself up to exposure for tortious interference. The claim often is predicated on the theory that the company induced the employee to breach his or her anti-raiding agreement with the competitor in order to gain access to the competitor’s employees—who came over with knowledge of the competitor’s customers and confidential information.

Even in the absence of anti-raiding agreement, a company who hires away multiple employees from a competitor could face exposure for employee raiding or poaching. How a court will view this conduct depends in large part on the numbers. The greater the number of employees hired away from the competitor, the greater the chance a court will view this conduct as unfair competition.

Employee raiding or poaching can wreak havoc on an employer’s business. Anti-raiding agreements are a preventative measure. If employee raiding or poaching does happen, the employer can seek injunctive relief through emergency litigation such as a temporary restraining order or preliminary injunction. The employer can seek to recover damages against the former employee for breach of the anti-raiding agreement. The employer may also be able to recover damages from the former employee’s current employer under theories of tortious interference, unfair competition, or even for theft of trade secrets in violation of the Illinois Trade Secret Act, 765 ILCS 1065/1 et seq.

DiTommaso Lubin’s Illinois business trial lawyers have over thirty years of experience defending and prosecuting non-compete, trade secret and restrictive covenant lawsuits. Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer in the Categories of Business Litigation, Class Action, and Consumer Rights Litigation. Our Chicago and Elmhurst business dispute and restrictive covenant lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist Chicago, Cook, and DuPage County area businesses and business owners who are victims of fraud. You can contact us by calling 630-333-0333. You can also contact us online here.