Alleged “no-poach” agreements highlight risks for employers relying on shared labor pools.
A recent decision from the Fourth Circuit reinstated a proposed class action against several major U.S. naval shipbuilders, including General Dynamics and Huntington Ingalls. The case involves allegations that these companies conspired with consulting firms to suppress wages of engineers and architects through informal “no-poach” agreements. The plaintiffs claim that for years, these firms avoided recruiting from one another to keep salaries artificially low.
The district court originally dismissed the case on statute of limitations grounds, ruling the claims were brought too late. But the appellate court reversed, agreeing that the plaintiffs had plausibly alleged fraudulent concealment. According to the complaint, the companies avoided documenting the agreements and used coded language to keep employees from discovering the wage-fixing scheme, which only came to light in 2023.
This case serves as a reminder for businesses that rely on hiring from a specialized labor pool or work with subcontractors and staffing agencies.
Even informal or unwritten agreements not to solicit talent from competitors can expose companies to liability. Employers should ensure recruiting practices are independent and compliant, and employees’ delayed discovery of such conduct won’t necessarily bar them from seeking legal remedies.
This post is for informational purposes only and does not constitute legal advice. If you have questions about your specific situation, you should contact a lawyer for assistance. Nothing herein is intended to create any attorney-client relationship between you and DLM LAW.
