An HR Director at an Industry Conference Is Told by a Competitor’s HR Lead: “We’ve Stopped Recruiting Your Engineers — Professional Courtesy. We’d Appreciate the Same.” Nothing Was Signed. No Formal Agreement. Is That Legal?

Quick Answer

Is an informal verbal understanding between two competing employers to stop recruiting each other’s employees a Sherman Act violation — even without a written contract or formal agreement?

Yes — and this is one of the most important antitrust compliance facts HR professionals don’t know. A no-poach agreement does not require a written contract, a formal meeting, or even explicit language. The DOJ has confirmed that informal understandings between competitors not to recruit or hire each other’s employees are per se violations of Section 1 of the Sherman Act — meaning no proof of competitive harm is required, only that the agreement existed. Since 2021 the DOJ has been criminally prosecuting these cases. The conversation itself, if it results in any mutual understanding, may be the violation.

Enforcement Context

The DOJ and FTC issued joint guidance in 2016 establishing that no-poach and wage-fixing agreements between competing employers are per se antitrust violations. In 2021, the DOJ began bringing criminal indictments — not civil settlements — in these cases. Prosecutions have occurred in healthcare staffing, food service, and technology sectors. The original Silicon Valley case — Apple, Google, Intel, Adobe, Pixar, and others maintaining informal do-not-recruit agreements for engineers — resulted in a $415 million civil settlement. No-poach clauses in franchise agreements are an active FTC enforcement priority through 2024.

The Situation

A regional HR director at a mid-size technology company is attending an annual HR leadership conference. During a networking dinner, she finds herself seated next to the VP of People at a direct competitor — a company that competes for the same pool of software engineers in the same metro market. They have a genuinely warm conversation about the difficulty of retaining specialized engineering talent, the cost of counter-offers, and the damage that aggressive recruiting between direct competitors does to both organizations.

Near the end of the dinner, the VP of People says, “Honestly, we made a decision six months ago to stop cold-calling your engineers. It just creates bad blood on both sides, and frankly, we’re all poaching from the same small pool. I wanted you to know that — and I’d appreciate the same professional courtesy from your side. No formal agreement, just peers being sensible about it.”

The HR director finds this reasonable. The conversation was collegial. Nothing was written. No executives were involved. She is deciding what to do.

Choice AAgree verbally and extend the same courtesy. This is sensible HR peer conduct, not a business arrangement. Nothing was signed, no executives were involved, and both organizations benefit from less destructive competition for talent.

Choice BDecline to agree in the moment, end the conversation politely, and report it to Legal first thing the next business day — with a full written account of who said what, when, and where. Do not discuss recruiting practices with this person again without Legal present.

Choice CSay nothing in the moment — neither agree nor disagree — and simply don’t honor the informal arrangement. Continue recruiting from the competitor’s workforce normally. If no agreement was explicitly accepted, there is no violation.

The Right Call

Choice B — Decline, end the conversation, and report to Legal immediately.

Choice A is the Sherman Act violation — the moment any mutual understanding exists, the agreement is established regardless of formality. Choice C is more dangerous than it appears: saying nothing in the moment while continuing to recruit does not retroactively undo an implied acceptance. If the competitor later claims an agreement existed — in litigation or a DOJ investigation — the HR director’s silence at the table and subsequent behavior will be interpreted as acceptance. Choice B is the only response that creates a documented record that the company rejected the arrangement, and gives Legal the opportunity to assess what, if anything, the conversation itself has already created.

HR professionals are the most common unwitting antitrust violators — because no-poach conversations feel like professional relationship management.

Sales employees are trained to be cautious about conversations with competitors because price-fixing is culturally understood as illegal. HR professionals are almost never trained on antitrust because their function isn’t traditionally associated with competition law. A conversation about not recruiting each other’s people feels like professional courtesy—the kind of collegial behavior that builds a strong industry reputation. That is precisely what makes it the most consistently missed antitrust risk in enterprise organizations.

“No formal agreement” is not a defense — it is a description of how most no-poach violations begin.

The Silicon Valley case involved no written contracts between Apple, Google, and the other participants. The arrangements were maintained through executive-to-executive verbal understandings. The DOJ and civil plaintiffs reconstructed them through email fragments, hiring data patterns, and witness testimony. A no-poach arrangement that is never written down is not protected — it is simply harder to detect, which means it tends to persist longer before enforcement action occurs.

The conversation itself may need to be reported—not just the decision about whether to comply.

This is the nuance most training programs miss. The HR director needs to report the conversation to Legal regardless of whether she agreed to anything. Legal needs to assess whether the conversation itself constituted an offer to enter a per se illegal agreement — and whether the company has any obligation to proactively disclose it. This is the same logic that applies to a price-fixing conversation within a trade association: the moment it happens, Legal needs to know.

Are no-poach agreements between competing employers illegal under US antitrust law?

Yes. The DOJ and FTC joint 2016 guidance confirmed that no-poach agreements — agreements between competing employers not to recruit or hire each other’s employees — are per se violations of Section 1 of the Sherman Act, subject to criminal prosecution. Since 2021 the DOJ has brought criminal indictments in these cases. The absence of a written contract does not affect the analysis — informal verbal understandings between competitors are sufficient to establish the violation.

What is the difference between a no-poach agreement and normal industry networking?

Normal industry networking includes discussing workforce trends, compensation benchmarking through third-party surveys, and general hiring challenges. It does not include any discussion of whether to recruit specific companies’ employees or any understanding — explicit or implied — that competitors will limit recruitment from each other. The line is: discussing the market is networking; discussing what each company will or won’t do in that market is a potential antitrust violation.

What should an HR professional do if a competitor raises a no-poach arrangement in conversation?

Stop the conversation immediately — do not agree, do not say you’ll think about it, and do not remain silent in a way that could be interpreted as acceptance. State clearly that your company does not enter into arrangements regarding recruiting practices with competitors. End that portion of the conversation. Report the conversation to Legal in writing as soon as possible — including who was present, what was said, and the response given. Do not discuss recruiting practices with that person again without Legal’s guidance.

How to Use This Scenario in Training

Recommended for HR, talent acquisition, people operations, and any manager involved in recruiting or compensation decisions. This scenario is most impactful when HR professionals genuinely don’t know that no-poach agreements are criminal, which is most of them. The training moment is recognizing that competition law applies to labor markets, not just product markets, and that the most common no-poach conversations occur at exactly this kind of collegial industry event.

This scenario demonstrates the normalization rationalization pattern from the Decision Readiness Engine™ — “professional courtesy between peers” is the framing that makes a per se Sherman Act violation feel like good industry citizenship. Decision-ready HR professionals recognize that the competition law framework applies to their function and that a collegial conversation at a conference can expose their organization to criminal liability.

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