Sunday, January 18, 2009

Louisiana Appellate Court Affirms Finding That No-Hire Clause Is Overbroad (Bell v. Rimkus Consulting Group)

The Louisiana case of Bell v. Rimkus Consulting Group has a long and tortured history, and generally speaking, appears to substantially favor the departing employees who sued their former firm seeking to have their rights under a customer non-solicitation clause declared invalid.

A recent ruling by the Court of Appeal of Louisiana further favors the employees and strictly applies an employee non-solicitation, or "no-hire" clause. These types of restraints of trade are receiving increased judicial scrutiny as employers attempt to prevent the poaching away of key employees. Courts have taken a number of different approaches in analyzing no-hire clauses. The general rule appears to be that, while the same are restraints of trade, they are not necessarily subject to the same rigorous analysis as customer non-solicitation or general non-compete covenants.

In the Bell case, the court upheld a trial court ruling, however, that a no-hire clause was invalid due to its overbreadth. The clause provided that Bell, following his termination, "will not, directly or indirectly, solicit, employee, or in any other fashion, hire persons who are, or were, employees, officers, or agents of the Company, until such person has terminated his employment with the Company for a period of eighteen (18) months."

The overbreadth of the no-hire clause was fairly obvious: it had no temporal limitation at all on Bell's conduct. As an illustration, if Bell waited ten years to approach a Rimkus employee for a new position, he would be barred from soliciting that person until he or she had left Rimkus' employment and was gone for at least 18 additional months. Put another way, the temporal limit was tied not to Bell, the party seeking to hire the employee, but rather to the employee being solicited.

The Louisiana court appeared to apply a conventional restrictive covenants analysis to the no-hire clause.


Court: Court of Appeal of Louisiana, Fifth Circuit
Opinion Date: 1/13/09
Cite: Bell v. Rimkus Consulting Group, Inc., 2009 La. App. LEXIS 48 (Ct. App. La. Jan. 13, 2009)
Favors: Employee
Law: Louisiana

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