The following is not meant to be legal advice.
The California Court of Appeals in VL Systems, Inc. v. Unisen, Inc. on June 25, 2007 stopped the practice of allowing businesses to agree to refrain from hiring one another’s employees, including consulting services.
VL Systems, Inc. and Star Trac Strength had a computer consulting contract where Star Trac Strength agreed to pay liquidated damages if it hired any VL Systems employee, or extended an employment offer during or within 12 months after the contract termination.
After completion of the contract, VL Systems hired David Rohnow as a senior
engineer. Later, Star Trac Strength posted a job listing for a director of
information technology. Rohnow applied and was hired. The no-hire provision in the VL Systems case was an impermissible restraint on trade and unenforceable.
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