California’s Unfair Competition Law (UCL), codified in Business and Professions Code Section 17200, prohibits any unlawful, unfair, or fraudulent business act or practice. This broad statute has been applied to challenge “no-poach” provisions – also known as no-hire or non-solicitation agreements between competing companies – where employers agree not to recruit, solicit, or hire each other’s employees, either explicitly or through informal arrangements. Such agreements are viewed as anticompetitive because they restrict employee mobility, suppress wages by limiting competition for talent, and hinder workers’ ability to negotiate better compensation or job terms.
No-poach provisions also may violate California antitrust laws under the Cartwright Act (Business and Professions Code §§ 16720 et seq.), which bars agreements that restrain trade, including those that suppress compensation or limit hiring among competitors. They can also constitute violations of the Unfair Competition Law (UCL – Section 17200) when deemed unlawful or unfair business practices.
PSSI is a national cleaning and sanitation company that contracts with dozens of meatpacking and food processing facilities in California and hundreds across the country. Nationally, PSSI employs over 17,000 workers across approximately 500 worksites. PSSI has had cleaning contracts with over 20 meatpacking and food processing companies in California, including well-known names such as Foster Farms, Harris Ranch, and Pilgrim’s Pride.
DOJ’s investigation revealed that PSSI had implemented a no-poach provision in 22 out of its 24 operative contracts in California, which impacted the rights of approximately 6,000 employees who worked pursuant to those contracts. Today’s judgment, once approved by the court, resolves the allegations stated above.
According to the Attorney General, this business practice, often hidden from employees, can have serious implications including artificially lowering employee compensation, reducing incentives for companies to improve working conditions, and limiting employee career growth.
Last April, the Attorney General filed a lawsuit against PSSI in the Superior Court of the State of California, County of San Diego, Case No. 25CU022640C, entitled The People of the State of California v. Packers Sanitation Services, Inc., LTD., dba Fortrex; Packers Sanitation Services, LTD., LLC, a California corporation; and Does 1 through 20, alleging a cause of action for violations of Business and Professions Code Section 17200 Unfair Competition Law related to the No Hire Provision allegedly contained within Services Agreements So-called no-poach provisions are contractual agreements between employers to not hire each other’s employees.
The People further allege that PSSI’s No Hire Provision had the effect of restraining employee mobility in violation of Business and Professions Code section 16600.
PSSI removed the No Hire Provision from all of its California Services Agreements by February 2024.
This week the California Attorney General announced a settlement against Packers Sanitation Services, Inc. LTD., now doing business as Fortrex (PSSI), a national cleaning and sanitation company, resolving allegations that the company used unlawful “no poach” agreements that restrict competition. As part of the settlement, PSSI will provide notice to employees and customers regarding its discontinued use of the unlawful provision, in addition to paying $500,000 in civil penalties.
According to the Settlement Agreement the Defendants continue to deny all allegations of wrongdoing and liability in connection with this litigation.
There have been several other no-poaching cases filed in California dating back to at least 2011.
2011 – In re High-Tech Employee Antitrust Litigation, Settled in 2015 for $415 million.
2014 – In re Animation Workers Antitrust Litigation, Settled in 2017 for $100 million.
2016 – Frost v. LG Electronics Inc., Dismissed in 2018 for failure to plausibly allege U.S. impact.
2017 – Markson v. CRST International Inc, Ongoing
2018 – Multistate Fast-Food No-Poach Settlements (e.g., Arby’s, Dunkin’, Five Guys, Little Caesars), no monetary penalties but injunctive relief.
2019 – Multistate Fast-Food No-Poach Settlements (e.g., Burger King, Popeyes, Tim Hortons), 2020 settlements prohibited future use nationwide.