A civil antitrust suit filed last fall by the U.S. Department of Justice against eBay alleges that an unwritten agreement by eBay not to recruit or hire the employees of Intuit constitutes a “per se” violation of the federal antitrust laws. The department alleges that the agreement was a “handshake” deal by senior executives of both companies, and that this agreement reduced the two competitors’ incentives and ability to compete. The Justice Department further alleges that the agreement restricted employee mobility by lowering salaries and benefits that the employees otherwise could have commanded.

Regardless of the merits (or lack thereof) of the Justice Department’s factual assertions or legal theories, the case is noteworthy to employers because employees may cite the case in support of challenges to employment practices that most businesses believed to be perfectly lawful. For example, employers frequently negotiate agreements with senior executives that prohibit the executive for some defined period from participating in post-employment hiring or recruiting of employees from the former employer. Similarly, in the context of a purchase of a business, the buyer may negotiate to prohibit the seller for some period of time from hiring employees of the business. In both of these circumstances, the parties enter into such agreements for the purpose of protecting the employer’s goodwill or trade secrets, and in most cases would have had no reason to believe that the restrictions on hiring or recruitment could be construed as unreasonable.

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