Can employers agree not to hire, or not to pay more?

What a no-poach or wage-fixing agreement is

A no-poach agreement is a deal between companies, not between a company and a worker. Two employers who would normally compete for the same talent quietly agree not to recruit, cold-call, or sometimes even hire each other's employees. A wage-fixing agreement goes one step further: the companies agree on the pay, pay ranges, or benefits they will offer, so that neither has to outbid the other. A related variant is a non-solicitation pact, where each side promises not to approach the other's staff, even when a worker would happily have taken the call.

Workers are almost never told any of this is happening. From the inside it just looks like the phone stopped ringing: recruiters do not reach out, outside offers dry up, and raises stay small because your employer knows you have nowhere to take a competing offer. That is exactly the mechanism a group of technology employees described in the leading federal case on this issue, where workers alleged that agreements among their employers not to cold-call one another's staff suppressed pay across entire companies.

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Why these agreements can be illegal

Antitrust law treats the labor market like any other market. When companies that should be bidding against each other for workers instead coordinate, they are rigging the price of labor, and the price of labor is your paycheck. Under federal antitrust law, naked agreements between competitors not to compete are the most serious category of violation, and courts have allowed employees to pursue exactly these theories against employers who agreed not to recruit one another's staff.

California has its own antitrust statute, the Cartwright Act, which prohibits combinations of two or more persons formed to restrain trade or commerce. A worker injured by such a combination does not have to wait for the government to act: the Act gives any person injured by a forbidden combination the right to sue and to recover three times the damages actually sustained, plus attorney's fees and costs.

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How this differs from an ordinary unpaid-wage claim

A typical wage-and-hour claim says: I worked hours my employer did not pay for. The hours are on a timesheet, the rate is on a wage statement, and California Labor Code section 1194 lets a worker recover unpaid minimum wage or overtime directly, with interest, attorney's fees, and costs. The injury is visible on the paycheck itself.

A no-poach or wage-fixing claim is different in kind. Your paycheck may match your agreed rate to the penny. The injury is that the rate itself was artificially low, because the market that should have bid your pay upward was switched off by agreement. Proving that usually depends on evidence of the agreement, internal documents, and economic analysis comparing what pay looked like with and without the restraint, rather than on timesheets. That is also why these cases are almost always brought as class actions: the same agreement suppresses pay for an entire workforce in the same way, so one case can address the injury to everyone.

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What California adds, and what you can do

California is unusually protective of a worker's freedom to move. Business and Professions Code section 16600 declares contracts that restrain anyone from engaging in a lawful profession, trade, or business void, which is why the noncompete clauses common elsewhere are generally unenforceable here. Section 16600.5, effective in 2024, goes further: it makes such restraints void regardless of where or when the contract was signed, and makes it unlawful for an employer to attempt to enforce one. A no-poach agreement raises the same policy concern from a different angle, because it restrains your mobility through a deal you never signed and were never shown.

If you suspect this is happening, pay attention to the signals: a recruiter who says they cannot consider people from a particular company, a hiring manager who mentions an understanding with a competitor, pay bands that track a rival's with suspicious precision, or offers that vanish once your current employer is named. Save what you can, in writing, from your personal accounts. Then talk to an employment lawyer, because whether a particular agreement crosses the line is a fact-heavy question, and because the realistic path to recovery is usually a class case covering everyone whose pay the agreement touched.

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