Employee Poaching: Ethics, Rules and Regulations

All’s fair in love, war and business. But does employee poaching go too far, or is it par for the course? Some recruiters won’t go there, while others readily scoop up other companies’ talent. So, do business ethics play a role here, or are non-stealers just being overcautious?

 

We’ll explore all of those questions—and a few others—in this brief guide to employee poaching. By the time you reach the conclusion, you’ll know all about this controversial recruitment method.

 

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What is employee poaching?

Employee poaching sounds so dramatic, doesn’t it. It’s a lot less sensational than it sounds, though. In simple terms, employee poaching takes place when one company hires someone—often an industry expert—who is employed by another company. Other loaded names for employee poaching include lateral hiring, employee raiding and talent poaching.

 

Why do companies poach employees when they could recruit people without jobs? The answer is simple: many highly qualified people are already employed. You need candidates with a particular set of skills; those candidates might already have jobs.

 

So, is it unethical to interview applicants with existing employers? Not at all. Your new employee’s previous boss might feel bruised, but they can’t accuse your company of an ethics breach. People switch from one company to another all the time.

 

Employee poaching: pros and cons

Employee poaching might not be unethical, but is it always the right thing to do? Not necessarily. Let’s review a few poaching pros and cons before we move on to the legal segment of this article.

 

Poaching pros include:

  • New recruits often contribute fresh ideas and come up with innovative solutions to exciting problems.
  • Some new employees bring leads with them, so you could get an instant sales boost.
  • Your company reputation might improve if you hire someone genuinely talented.

Poaching cons include:

  • If you lure employees away from your competitors too often, you may get a reputation for being aggressive, which can put clients off your company.
  • Non-compete agreements can land you in hot water (more on those below).
  • New recruits who share insider secrets might get you into legal trouble—so stay away from intellectual property.

If you offer a passive candidate better terms than their existing employer, they may work harder for you than they work for their current boss. You may also find it easier to hire your recruit’s former colleagues if your new employee reports back favorably. Sneaky, but true.

 

Are no-poach agreements legal?

Companies create no-poach agreements to stop other businesses “stealing” their employees. These agreements work like hiring truces between two or more companies, and they happen behind the scenes on a B2B basis. Instead of competing for employees by offering better terms or better wages, companies agree not to hire each others’ workers. Meanwhile, employees remain oblivious and find it difficult to seek promotion or improve their working conditions.

So, are they legal? In a word, no, they’re not. Not anymore. In 2016, the federal government hardened its stance on no-poach agreements and wage-fixing agreements on the grounds that both types of contract potentially restrict competition. These days, companies found to have engaged in no-poach agreements face prosecution under federal antitrust laws.

 

There are very limited exceptions to the antitrust rules. If two companies are collaborating with one another, for example, they may agree to refrain from soliciting each others’ employees—but only temporarily. They have to be able to prove that their no-poach agreements are “reasonably necessary“—specifically, that they’re a vital part of the continued partnership.

 

What about non-compete agreements?

Non-compete agreements are contracts made between an employer and an employee, rather than B2B contracts. When they sign non-compete clauses, employees promise their employers that they won’t compete against them while they’re employed and for a set period after their employment comes to an end.

 

Some non-compete agreements make employee poaching tougher. With that said, non-compete agreements also have to follow a strict set of rules to be legal—and legally enforceable. Non-compete agreements have to be “reasonable.” A printing press can’t, for example, demand that an ex employee never work for another printing press again.

 

Non-compete clauses that restrict employees and ex-employees too much—either geographically or from a future employment perspective—tend not to hold up well in court. Agreements with strange or extreme conditions don’t fare well under legal scrutiny either.

 

How to poach-proof your employees

Poaching doesn’t happen without consent. In other words, your competitor’s employees have to be open to the idea of being recruited by you. Maybe you can offer them a better career path; perhaps they like the atmosphere in your office. Whatever the case may be, you have the upper hand.

 

Now, if you want to prevent your own employees from being poached, you have to think like the poacher. What can your competitors give them that you can’t? You can help reduce poaching at your company by:

  • Providing employees with a clear career path: Employees with achievable future prospects don’t tend to stray as much as those without obvious paths to promotion.
  • Pay your top performers well: Reward your most talented employees for their efforts—and reward them more than your competitors would.
  • Create longevity bonuses: Give long-term employees monetary incentives to encourage them to stick around.
  • Give employees responsibility: Make your workers feel part of the bigger picture by giving them responsibilities sooner than they expect.
  • Get work-life balance right: Your employees have important things to do at home, too.
  • Offer flexible hours and telecommuting: These options are very helpful for working parents and employees with long commutes.
  • Create an enforceable non-compete agreement: Make it friendly and include financial perks to encourage employees to sign on the dotted line.

One last thing: create a mission statement and make sure that it visibly permeates the fabric of your firm. Employees are far more likely to stay if they feel proud of the businesses they work for.

 

The poaching roundup

Let’s take a moment to recap. “Employee poaching” is a sensational term used to describe a scenario in which one business hires another business’s current or former employee. Employee poaching is frowned upon in some circles, but it’s not inherently unethical. Despite the emotive phrasing, employee poaching is nothing more than a logical recruitment tactic.

 

If you do decide to snap up rival talent, make sure you don’t go near legally enshrined intellectual property, and be aware of any non-compete agreements already in place. A final note: your recruitment tactic could backfire if you gain a reputation for poaching, so play fair.

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