Businesses and organizations make major investments into finding, recruiting, hiring, and training employees. If a direct competitor tries to swoop in and take all your qualified staff, it could cause serious harm to your business. California law provides some limited legal protection in this scenario—but employee poaching is technically not a prohibited practice. In this article, our Fremont business law attorney provides an overview of the key things companies should know about the regulations surrounding employee recruitment and hiring in California.
Know the Law: California is an At-Will Employment State—But Workplace Raids are Banned
Businesses in California are right to be worried about protecting their human capital. Companies make tremendous investments into training employees. A competitor may try to come in and take your qualified staff. At the same time, California is an “at-will” employment state. Employees can leave a company for any reason. The law does not stop them from joining a competitor.
In fact, California allows businesses to recruit directly from competitors. State law does not specifically ban the practice of employee poaching—whereby businesses actively seek out and hire workers from their competitors. As frustrating as it can be to deal with a competitor that is recruiting your employees, it is not an unlawful practice.
With that being said, there is an important limit: California does bar workforce raids. That is viewed as an anti-competitive, monopolistic practice. A competitor that attempts to raid your staff—meaning they aggressively try to hire many (or all) of your employees at once—may be in violation of state law. A workforce “raid” is distinct from lawful hiring recruitment.
The Best Legal Strategy to Protect Against Employee Poaching: Employment Agreements
Employers are not entirely helpless against the forceful recruiting of their staff. One of the best approaches to safeguard against employee poaching is to use well-written employment agreements. These contracts should clearly outline the terms of employment—including job responsibilities, salary, benefits, and duration. A contract may be structured so that an employee is strongly (financially) disincentivized from joining a competitor for a predetermined time.
In California, businesses should avoid including non-compete provisions within an employment agreement. Non-competes are not enforceable in California. Indeed, in September of 2023, California Governor Gavin Newsom signed Senate Bill 699 into law—legislation that further expands the state’s ban on non-compete agreements. In other words, an employment agreement cannot directly bar an employee from joining a competing firm in the future.
The bottom line on understanding the regulations surrounding employee recruitment and hiring in California: the state allows competing businesses to recruit directly from each other’s staff—as long as they avoid anti-competitive mass “raids.” Companies can use employment agreements to help retain their staff.
Get Help from Our Fremont, CA Business Law Attorney Today
Lynnette Ariathurai is a business lawyer with considerable experience helping companies navigate California’s employment, recruitment, and employee poaching laws. If you have questions about your rights, your options, or protecting your employees, please do not hesitate to contact us today. With an office in Fremont, we work with businesses throughout the Bay Area.