Competition among businesses is always viewed as healthy for the economy but sometimes rival businesses cross the line. One way they cross the line is by illegally poaching or raiding highly skilled employees from their competition. Poaching happens when a rival company or business hires a significant number of employees from a competitor’s company intentionally to gain an advantage.
While this is not always illegal, in some cases the company that is doing employee raiding could end up facing legal consequences. If you have questions about employee poaching contact an experienced lawyer near you.
Understanding Employee Poaching
Employee Poaching Lawsuit
When rival companies poach employees from other companies, they are often trying to steal talent from their competition. In Texas, this is not illegal unless it violates employment contracts. For example, if an employee signs an agreement that includes provisions concerning rival company employment but then gets employed by a rival company, their previous employee can sue for damages.
The most common types of agreements include the non-compete agreement and the non-solicitation agreements. A non-compete agreement may have provisions limiting some activities, rival company employment, and location. On the other hand, a non-solicitation agreement is meant to prevent an employee from working for a rival company or taking clients or other employees with them if they decide to work for a rival company.
Another scenario that can be considered unlawful is if a company poaches in order to steal trade secrets, get access to secret information, and unfair competition. The wronged employer can either sue the former employee or the company that hired the employee in this situation.
Consequences For Breaching Employment Contract
Is Poaching Employees Illegal
An employee has breached an employment contract if they fail to fulfill the obligations that they agreed to when they got employed. Your employer can either sue the employee or settle the matter informally. People that signed either a non-compete or a non-solicitation agreement and then breached it can face consequences such as:
- Paying expensive legal fees
- Paying former employees for losses incurred due to losses caused by a breach of contract
- Facing punitive damages for emotional distress and more
A court may only award damages to an employer that has suffered actual financial loss. These are just a general description of these consequences.
Why Companies Poach Employees
Employee Poaching Laws
In highly competitive industries where the supply of employees with technical skills does not meet demand, employee poaching is a common occurrence. These include industries such as data analysis, programming, software development, and more. Recruiters often approach employees from competing companies and offer them higher wages and benefits if they switch companies.
But some companies poach employees to get secret information or data from their competition. This is when employee poaching becomes illegal.
How To Prevent Poaching Of Your Employees
Stealing Employees From Another Company
You may have to take certain steps to avoid losing highly skilled employees who are critical to your bottom line. A salary raise is an obvious way to avoid losing your employee but this option is only available if you can afford it. If you can’t afford it, you can give them extra time off, offer childcare subsidies; offer to fund their education, and more.
You could also just ask your employees to sign non-competition and non-solicitation agreements.
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