Los Angles partner Kate Gold was quoted in The Hollywood Reporter in an article titled, “Netflix’s Poaching of Fox Employees Could Set New Legal Precedent.” The article discusses 21st Century Fox’s recent lawsuit against Netflix, accusing the company of illegally poaching Fox employees.
Fox claims that Netflix induced breaches of contract for two former Fox executives who left voluntarily earlier this year. While California law typically does not like to restrict worker mobility, the entertainment industry has historically referred to California’s “seven-year-rule” for personal services contracts. Previously, non-compete clauses have been deemed invalid after an employee leaves a company. Fox argues that the one executive was under a fixed-term employment contract through 2019, while Netflix is arguing that the executives were free to leave any time—raising the question of whether an employment agreement can place holds on employees for any period of time. Kate noted that damages may be possible.
“The bottom line is that Fox can recover damages from the employees for breach and from Netflix for inducing a breach, but it probably cannot stop the employees from working for Netflix,” Kate said.
If Netflix prevails, it could set a legal precedent on poaching and the validity of employment agreements.
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