The Demise of Non-Solicitation Agreements – A Double-Edged Sword for Healthcare IT?

The Demise of Non-Solicitation Agreements – A Double-Edged Sword for Healthcare IT?

Posted on 14. Apr, 2011 by in Employers, Featured, Job Seekers, Recruiting Tips

Nothing can be more disruptive to an organization’s plans than to lose a key person.  Because of this, many times partnering organizations, vendor/clients, client/client, and even competing organizations will put formal and informal “agreements” in place not to hire each other’s employees.  These types of agreements have been in place for many years within various industries, Healthcare IT certainly being one of them.  Over the past couple of years, some Healthcare IT vendors and consulting firms have been very aggressive in establishing policies as it relates to hiring practices.

The most common of these types of agreements is as simple as two organizations agreeing not to hire each other’s employees.  Others may be a vendor telling its clients that they cannot hire from their other clients….because of the disruptions that may be caused to current projects.

Not much consideration is given to the limitations this puts on the people who may want to take advantage of career opportunities within the organizations their current employer has these types of agreements with.

Many of the organizations our firm works with have been very proactive to add to their staffs over the last six months or so and are now looking to implement policies with the hopes of retaining their current staff for the long haul.  What may make things more difficult is a recent settlement by the Department of Justice that occurred in September:

http://www.justice.gov/opa/pr/2010/September/10-at-1076.html

On the Department of Justice Web site, it states:

“In September, the Department of Justice announced that it has reached a settlement with six high technology companies – Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar – that prevents them from entering into no solicitation agreements for employees.   The department said that the agreements eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.”

The agreements the six organizations had in place did not prevent them from “hiring” each other’s employees.  If an employee from one of the organizations were to apply for a job on their own, the company they applied to could hire them.  They were only in agreement not to solicit each other’s employees.  The Department of Justice had a problem with just the “non solicitation” part of the agreement and how that could affect the employee’s options and value in the marketplace.

With this ruling, employers have a few less tactics to keep turnover from happening.  So, as these types of agreements are dissolved, what impact will this have on an already competitive Healthcare IT employment market?

David Kushan

David Kushan is the President of Healthcare IS and has spent the last 18 years of his career working in the Healthcare Information Technology industry assisting over 120 healthcare organizations nationwide. Visit www.HealthcareIS.com for Dave’s company blog, articles, podcasts and more.

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One Response to “The Demise of Non-Solicitation Agreements – A Double-Edged Sword for Healthcare IT?”

  1. Tim

    19. Apr, 2011

    Very informative and thought provoking article.

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