February 16, 2016 Articles

Employer Anti-Poaching Agreements: A Tale of Disney Legal Troubles

A look at the implications for employee contracts, recruitment, internal records, and litigation costs.

By Jeana Goosmann – February 16, 2016

Can a worker at Disney be snatched away by a competitor with promises of greater fairytales?

Once upon a time, the plaintiff in a shareholder derivative suit pending against Disney and its former and current board members claimed that, starting in the mid-1980s, companies in the animation business—including Pixar and Lucasfilm—attempted to reduce employer competition and depress employee compensation by agreeing not to recruit each other’s employees by “cold calling” them and by sharing employee compensation data. According to the complaint, these practices violated federal antitrust laws. While Disney had no involvement in originating the alleged deal, Disney is being sued now because Disney acquired Pixar in 2006 and Lucasfilm in 2012.

To understand this fully, we need to go back a few years to when the Department of Justice (DOJ) looked into these anti-poaching and employee information sharing agreements. In 2009, the DOJ began investigating the recruiting practices of Pixar, Lucasfilm, and other Silicon Valley companies. In 2010, the companies entered into final judgments with the DOJ agreeing to “refrain from soliciting, cold calling, recruiting, or otherwise competing for employees” unless those agreements were, inter alia, “reasonably necessary for mergers and acquisitions” or “reasonably necessary for . . . a legitimate collaboration agreement, such as joint development. . . .” The final judgments did not include any findings or admissions of wrongdoing, and the judgments did not fine or penalize the companies.

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