California Court of Appeals Says No on Broad “No-Hire” Contracts

The California Court of Appeals effectively banned the practice of allowing businesses to agree to refrain from hiring one another’s employees, including consulting services agreements between two businesses. The June 25th VL Systems, Inc. v. Unisen, Inc. decision held that a broad “no-hire” provision between business parties that restricts employment opportunities for their respective employees is unenforceable. The Appellate Court determined that, as written, the “no-hire” provision in question was an impermissible restraint on trade and therefore unenforceable.