Final answer:
The clause prohibiting John from recruiting employees when leaving is known as a non-solicitation clause. It ensures the employer's workforce investment and is legal if it does not unfairly restrict employment opportunities or violate antitrust laws. Exclusive dealing agreements can either foster competition or limit it, potentially crossing legal boundaries.
Step-by-step explanation:
The provision in John's employment contract that prohibits him from recruiting fellow employees to leave with him if he decides to take a job at another dealership is known as a non-solicitation clause. This type of clause is aimed at protecting the employer's business interests by preventing the loss of staff to competitors, thereby safeguarding its workforce investment and maintaining competitive advantage. While such clauses are common in many industries, they must be carefully crafted to ensure that they do not unfairly restrict an employee's future employment opportunities or violate any antitrust laws.
In relation to exclusive dealing agreements, if they serve to promote healthy competition among dealers, such as the arrangement between Ford Motor Company and its dealers or General Motors and GM dealers, they are often deemed legal. However, the line is crossed into potential illegality if the exclusive contracts stifle competition in the marketplace, for example, if a large retailer secures an exclusive deal to be the sole distributor of a wide range of electronics, effectively limiting other retailers' ability to compete.
Moreover, in the labor market, to protect themselves from hiring unsuitable candidates, employers often include a probationary period at the start of employment. During this time, an employee can be terminated without reason, which acts as a safeguard for the employer against the possible hiring of a 'lemon' and provides time for evaluating the employee's suitability for the position.