What Is Employee or Job Poaching?
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 growing industries that require employees with high-demand skills. For example, poaching is common in the IT industry because employers need workers with high-demand technical skills.
While some companies once made no-poaching agreements with each other, many of these companies no longer do so. However, there are many other ways that employers still try to prevent job poaching.
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 no-poaching 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 no-poaching agreements with their 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. Basically, no-poaching agreements limited employee’s opportunities for career and income growth.
What the End of No-Poaching Agreements Means for Workers
The end of no-poaching agreements has a number of possible benefits for employees. According to a survey of large employers by professional services firm Towers Watson, the average raise is around 3 percent per year.
Switching jobs might actually net considerably more for workers, 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.”
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 skills, earn 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 you run the risk of appearing disloyal or lacking in professional focus. But the ability to change jobs when you need to, without worrying about no-poaching agreements preventing the move, is important for career growth.
No-Poaching vs. Non-Compete Agreements
While no-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 employee and employer. It states that the employee will not enter into competition with the employer after he or she terminates employment. This usually means the employee cannot work for the company’s competitors or start his or her own competing business.
The purpose of a non-compete clause is to prevent a former employee from taking trade secrets to a competitor after terminating employment. It can also be used to prevent an employee from opening up a competing business.
What companies cannot do, however, is to 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 careers, or for a period of time that would impact their careers.
Non-compete agreements typically include 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 (such as California), non-competes are disregarded altogether, and every state has its own set of laws regarding the enforceability of NCCs.
Other Ways to Limit Employee Poaching
Employers might try to prevent employee poaching in ways other than a non-compete clause. For example, an employer might provide workers with incentive plans. An incentive plan might offer employees bonuses that are tied to the future success of the company. This can provide employees with a monetary incentive to stay at the company. It can also encourage workers to contribute to the success of the company.
Some employers also try to limit poaching by helping employees feel connected to the company. They might do this by creating a morale-boosting company culture. The employer might organize initiatives or activities to make workers feel connected to the company, and feel like they are part of a team. This will make employees less likely to leave the company for another job.