Is it illegal for competitors to poach employees?

| Feb 1, 2021 | business litigation

It is a common risk that former employees will go to work for competitors at some point in their careers. After all, they often have specific experience and education related to one industry.

Even though this is a common risk, some competitors might actively search for talent in other companies and try to take it for their own. Poaching is a common issue big businesses face, but could it lead to legal disputes?

A recent case highlights disputes over employee poaching

CNN reported that the vehicle manufacturer Tesla recently filed a lawsuit in California courts claiming one of their competitors, Rivian, poached employees from them. Moreover, the lawsuit claims that these former Tesla employees:

  • Took confidential documents and sent them to personal accounts; and
  • Violated non-disclosure agreements.

Rivian denies these claims.

The issues in this lawsuit stem from the claim that Rivian poached employees – however, is that actually illegal?

Recruiting talent from competitors is not illegal

Despite the term, poaching employees is not technically against the law.

Talent happens to be a significant source of competition between competitors in the business world. After all, star employees can make a big difference in how the business operates and, in turn, achieves success.

However, poaching employees does become illegal in a few situations. Tesla’s claims illustrate some of these situations, which include:

  1. If the circumstances lead to a breach of contract or other legal agreement;
  2. If competitors wrongfully interfere with the terms of an employment contract; and
  3. If employees steal or misappropriate a company’s trade secrets or other confidential information.

Poaching employees might not be illegal, but business owners and employers should be aware that instances of poaching often significantly increase the risk of disputes or other legal issues.

Business owners must be proactive against the risk of talent poaching. They should review California’s laws regarding unfair competition and take the proper post-employment procedures with all employees in an effort to secure their trade secrets and protect their business.