What Is Employee or Job Poaching?

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Employee poaching (also known as job poaching, talent poaching, or employee raiding) is when a company hires an employee from a competing company. Employee poaching often happens in the IT industry because of high-demand technical skills.

While some companies once made non-poaching agreements with each other, many of these companies no longer do so.

Read below for more information on job poaching, and what the end of non-poaching agreements might mean for employees.

Agreements Not to Poach Employees

Previously, some tech companies had agreed not to poach each other's employees. Some of these agreements stated that companies could not practice “cold calling,” which refers to companies soliciting each other's employees.

However, after an investigation into non-competitive hiring practices, a settlement was reached between the U.S. Department of Justice and major tech companies, including Adobe, Apple, Google, Intel, Intuit, and Pixar. The companies under investigation agreed to no longer make non-poaching agreements with the competition.

According to a statement from the Justice Department, these kinds of agreements create a “form of competition, [that] when unrestrained, results in better career opportunities" for workers. These agreements “distorted the competitive process," and limited workers' career growth. 

What the Demise of Employee Poaching Agreements Means for Workers

According to a 2017 survey of large employers by professional services firm Towers Watson, the average raise is around 3 percent per year.

Switching jobs might actually net workers considerably more, especially if they're looking for a job while they have a job, and can afford to wait for an offer that's financially attractive. This is sometimes called “job hopping.”

The end of job-poaching agreements has a number of possible benefits for employees.

Employee-poaching agreements prevent workers from taking advantage of job hopping to boost their salaries. Without these agreements in place, workers can change jobs as often as they choose in order to increase their earnings and pursue better opportunities.

Not only does this potentially lead to fatter paychecks in the short-term, but in the long-term it might also benefit workers by providing them chances to learn new skillsearn promotions that lead to better job titles, and acquire more and better brand-name employers on their resumes.

Job hopping isn't without its risks, of course; switch jobs too often, and workers run the risk of appearing disloyal or lacking in professional focus. But the ability to change jobs when they need to, without worrying about employee-poaching agreements preventing the move, is important for career growth.

Employee Poaching vs. Non-Compete Agreements

While employee-poaching agreements are (for the most part) illegal, non-compete agreements are another story. A non-compete agreement or non-compete clause (also known as an NCC) is a contract between an employee and employer. It states that the employee will not enter into competition with the employer after he or she terminates employment.

The purpose of a non-compete clause is to prevent a former employee from taking trade secrets to a competitor after terminating employment. It might also be used to prevent an employee from opening up a competing business.

What companies cannot do, however, is prevent workers from working at a competing company indefinitely. Non-compete clauses generally cover a set period of time, often a few months, to prevent workers from jumping directly from one employer to a competitor after the termination of their employment. But companies cannot ask workers to promise not to work for a competing company for the remainder of their career, or for a period of time that would impact their career.

Non-compete agreements typically contain the effective date on which the agreement will begin, the reason for enacting the agreement, the dates when the worker will be prohibited from working with a competitor, the location of the agreement, and details about compensation in exchange for the employee agreeing to the NCC.

If you're asked to sign an employment contract containing a non-compete clause, your best bet is to seek legal counsel. In some states, non-competes are disregarded altogether, and every state has its own set of laws regarding the enforceability of NCCs.

Read More: What is an Employment Contract? | Non-Compete Agreement | Confidentiality Agreement | What to Look for in a Confidentiality Agreement | Employment at Will