On the Interpretation of No-Hire Provisions in Pennsylvania-- The Case for Utilizing Federal Antitrust Law

Abstract

Courts around the country lack guidance when evaluating the enforceability of an ancillary no-hire provision. In a jurisdiction without a statute directly on point, such as Pennsylvania, the paths taken thus far have ranged from adopting a noncompete framework to looking to other jurisdictions for assistance to relying on public policy rationales. The Pennsylvania Supreme Court recently adopted a test based on the reasonableness of the challenged provision, but the factors and the overarching reasoning confuse and conflate the concepts of “restraints of trade” and “restrictive covenants,” making it more difficult to reach a clear, sensible, and permanent solution. This Note draws a simple, logical line connecting no-hire provisions and the federal Rule of Reason test, advocating for its use whenever the enforceability of a no-hire provision is at issue. I argue that a no-hire provision is correctly categorized as a horizontal restraint of trade, that only reasonable restraints of trade are enforceable, and that the federal Rule of Reason test is the method by which the reasonability of a restraint is determined. Using this test provides a time-tested, inclusive, and fact-intensive framework that produces a well-considered and thorough conclusion as to the reasonability of a particular no-hire provision.