Pennsylvania Supreme Court Bars “No-Hire” Clauses Between Businesses

It is commonplace for businesses to include a “No-Hire” or “Non-Solicitation” provision in its agreement with another business.

However, the Pennsylvania Supreme Court has held that a contractual no-hire or “non poach” provision in a contract between businesses is not enforceable under the laws of the Commonwealth of Pennsylvania. Pittsburgh Systems, Inc. v. Beemac Trucking, et. al., case no. 31 WAP 2019.

The Supreme Court of Pennsylvania held that the no-hire or no-poach provision was a restraint on trade because the two commercial entities agreed to limit competition in the labor market by promising to restrict the employment mobility of business employees. The Court reasoned that while a business has a legitimate interest in preventing its business partners from poaching its employees, who had developed specialized knowledge and expertise in the logistics industry during their training a “no-hire provision is both greater than needed to protect the business interest and created a probability of harm to the public.

The Court also held that the anti-poaching provision must be carefully examined and not overbroad.

So what can you include in your agreement? How can you protect yourself? What provisions are actually enforceable?

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