Big news in the non-compete world.

The Department of Justice indicated that it would start using antitrust laws to target companies that use no-poach agreements.

Not all no-poach agreements. Just naked ones. (Meaning: no-poach agreements that are not reasonably necessary for a legitimate legitimate business transaction or collaboration.)

The DOJ’s now followed through with a complaint in district court.

Its target: Knorr Bremse AG and Westinghouse Air Brake Technologies Corporation (Wabtec), two of the world's largest rail equipment suppliers.

Allegedly, these companies agreed that they would not poach each other’s employees because the two companies “compete in the market,” and it would be prudent not to target each other’s employees.

These companies did not fight the allegations. They cooperated with the government. 

On the same day the complaint was filed, the stipulation for entry of judgment was also filed. Under the proposed stipulated judgment, the companies did not admit the truth of the allegations. But they did agree not to enter any naked no-poach agreements.

As for reasonable no-poach agreements, the proposed judgment carved them out. So the companies can still enter those. Yet if they do, the proposed judgment requires that the agreements:

1. be in writing and signed by all parties thereto;

2. identify, with specificity, the Agreement to which it is ancillary;

3. be narrowly tailored to affect only employees who are reasonably anticipated to be directly involved in the Agreement;

4. identify with reasonable specificity the employees who are subject to the Agreement; and

5. contain a specific termination date or event.