New PA Law on "No Hire" or "No Poach" Restrictions between Businesses

The Pennsylvania Supreme Court recently held that a no-hire, or “no poach,” clause between two commercial entities was an unreasonable restraint of trade and therefore unenforceable.  See Pittsburgh Logistics Systems, Inc. v. Beemac Trucking, LLC and Beemac Logistics, LLC, No. 31 WAP 2019, 2021 Pa. LEXIS 1853, WL 1676399 (Apr. 29, 2021). 

The Pennsylvania Supreme Court established a new three-prong reasonableness test to assess whether an ancillary no-hire provision would be enforceable: (1) whether the restriction protects a legitimate business interest; (2) whether the restriction is no greater than necessary to protect that legitimate interest; and (3) weighing that business interest against the likelihood of harm to the public.

The court held that horizontal market restrictions between two businesses undermine free competition in the labor market, and thus violate Pennsylvania public policy and antitrust law. Businesses who try to use this type of provision could face an enforcement action by the Attorney General.