In the previous three installments, we discussed how California law addresses contractual clauses that restrict post employment employee mobility and how the Department Of Justice (DOJ) sued and reached settlement with six Silicone Valley companies for signing anti-raiding provisions. In this final part of the four-part series, we explore the lessons to be learned from the DOJ settlement.
Lesson #1: – The bigger the company, the more careful it must be to avoid anti-competitive behavior
While the DOJ settlement proscribed behaviors much broader than those prohibited by California law, the legal reasoning of the federal and California courts is the same. The logical analysis of both when interpreting the Sherman Antitrust Act ("Sherman Act") is impact driven. Contracts that have a pernicious effect on competition or restrict the ability of employees to engage in their profession are unlawful.
Under the impact-driven analysis utilized by the courts, the truth is that the more successful a company is and the more it impacts the labor market, the more careful it needs to be to avoid any complaints of unlawful anti-competitive behavior.
Lesson #2: Watch out for agreements that restrain competition that are presented under the guise of “professional courtesy”
A second lesson to be learned from the DOJ's suit against the six Silicon Valley giants and the recent California court decisions in Silguero is that companies must do the following:
Avoid entering into contracts that unlawfully restrain competition
Refuse to enforce such agreements when presented to them in the guise of a request for professional courtesy