THE ENFORCEABILITY OF No - HIRE PROVISIONS IN MERGERS , ACQUISITIONS AND OTHER ENTREPRENEURIAL VENTURES

Human capital has become the principal competitive advantage for many businesses in today's increasingly specialized marketplace. In order to protect human capital, no-hire agreements have become boilerplate provisions in many types of contracts. Despite their prevalence, these agreements have not been uniformly and predictably enforceable, due to conflicting methods of interpretation from state to state. Depending on the state, one of three approaches will be employed to determine enforceability: (1) the antitrust approach, (2) the contracts in restraint of trade approach, or (3) the covenants not to compete approach. Over the past several decades, the contracts in restraint of trade and covenants not to compete approach have been the predominant methods of interpretation. Nevertheless, several recent cases employed the antitrust approach, suggesting that it may still be a viable option. This note examines the enforceability of nohires under each of these approaches. Specifically, this note evaluates the enforceability of no-hires executed in merger agreements as well as those executed ancillary to employee staffing contracts. Additionally, this note discusses the increased potential for forum shopping as a technique to successfully challenge enforceability.