What is an employee poaching lawsuit?

An employee poaching lawsuit is a legal action filed against a company that has allegedly hired employees from a competitor in an illegal or unethical manner. This can include violating non-compete agreements, stealing trade secrets, or tortiously interfering with the competitor’s business relationships.

Examples of employee poaching lawsuits

Here are a few examples of employee poaching lawsuits that have been filed in the United States in recent years:

• In 2023, Alliant Insurance Services was sued by its competitor Gallagher for allegedly poaching over 40 employees. Gallagher alleged that Alliant had used “unlawful and unethical tactics” to recruit its employees, including offering them higher salaries and benefits.
• In 2022, LoanDepot sued its rival CrossCountry Mortgage for allegedly poaching dozens of high-performing loan officers. LoanDepot alleged that CrossCountry had offered its employees illegal inducements to join the company, such as signing bonuses and loan forgiveness programs.
• In 2021, Mutual of Omaha Mortgage sued Waterstone Mortgage for allegedly poaching over 60 of its employees and misappropriating its trade secrets. Mutual of Omaha Mortgage alleged that Waterstone had used the information it obtained from its poached employees to gain an unfair advantage in the marketplace.

Damages that can be recovered in an employee poaching lawsuit

If an employer is successful in an employee poaching lawsuit, it may be awarded a variety of damages, including:

• Lost profits
• Punitive damages
• Injunctive relief to prevent the hiring company from continuing to employ the poached employees

Legal theories that can support an employee poaching lawsuit

There are a number of legal theories that can support an employee poaching lawsuit, including:

• Breach of contract: If the poached employees had non-compete agreements with their former employer, the hiring company could be liable for breach of contract if it induced the employees to violate their agreements.
• Misappropriation of trade secrets: If the poached employees took confidential information from their former employer and used it to benefit the hiring company, the hiring company could be liable for misappropriation of trade secrets.
• Tortious interference with business relationships: If the hiring company knew that the poached employees had non-compete agreements with their former employer and hired them anyway, it could be liable for tortious interference with business relationships.

6 unique FAQs

Q: What is the difference between employee poaching and employee recruiting?

A: Employee poaching is the illegal or unethical recruitment of employees from a competitor. Employee recruiting, on the other hand, is the legal and ethical recruitment of employees from all sources, including competitors.

Q: What are the signs that my company is being targeted by employee poachers?

A: Some of the signs that your company may be being targeted by employee poachers include:

• You are experiencing an unusually high number of employee resignations.
• You are receiving unsolicited job applications from employees of your competitors.
• You are hearing rumors that your competitors are offering your employees higher salaries and benefits.

Q: What can I do to prevent employee poaching?

A: There are a number of things you can do to prevent employee poaching, such as:

• Offering your employees competitive salaries and benefits.
• Creating a positive and supportive work environment.
• Having your employees sign non-compete agreements and confidentiality agreements.

Q: What should I do if I think my company has been the victim of employee poaching?

A: If you think your company has been the victim of employee poaching, you should immediately consult with an experienced employment lawyer. The lawyer can help you to assess your legal options and take steps to protect your company’s interests.

Q: What are the common defenses to employee poaching lawsuits?

A: Some of the common defenses to employee poaching lawsuits include:

• The poached employees did not have valid non-compete agreements.
• The poached employees did not take any confidential information from their former employer.
• The hiring company did not know that the poached employees had non-compete agreements with their former employer.

Q: What are the chances of winning an employee poaching lawsuit?

A: The chances of winning an employee poaching lawsuit depend on a number of factors, including the specific facts of the case and the strength of the legal arguments presented by the parties. However, employee poaching lawsuits can be successful, and

Employee poaching lawsuits can be a complex and expensive process, but they can be a successful way for employers to protect their businesses from unfair competition. If you are considering filing an employee poaching lawsuit, you should carefully consider the following factors:

• The strength of your case. Do you have evidence that the hiring company knew about the poached employees’ non-compete agreements or that it induced the employees to violate their agreements? Do you have evidence that the poached employees took confidential information from your company and used it to benefit the hiring company?
• The potential damages. How much money has your company lost as a result of the employee poaching? Are you entitled to punitive damages?
• The cost of the lawsuit. Employee poaching lawsuits can be expensive to litigate. You should weigh the potential costs of the lawsuit against the potential benefits.

If you decide to file an employee poaching lawsuit, you should consult with an experienced employment lawyer to discuss your legal options and develop a strategy for your case.

Here are some additional tips for employers who are considering filing an employee poaching lawsuit:

• Gather evidence. The more evidence you have to support your case, the stronger your chances of success will be. This evidence may include non-compete agreements, confidentiality agreements, emails, text messages, and witness statements.
• Act quickly. The longer you wait to file a lawsuit, the more difficult it may be to gather evidence and prove your case.
• Choose the right lawyer. It is important to choose an experienced employment lawyer who knows the law and has a track record of success in employee poaching lawsuits.

Conclusion

Employee poaching lawsuits can be a complex and expensive process, but they can be a successful way for employers to protect their businesses from unfair competition. If you are considering filing an employee poaching lawsuit, you should carefully consider the factors discussed above and consult with an experienced employment lawyer.