Antitrust Rules Apply to Hiring Practices

December 22, 2016

The Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission (FTC) recently issued antitrust guidance aimed at employers and Human Resources (HR) professionals’ potential violations of antitrust laws. This guidance focuses on agreements among employers that attempt to wage-fix and prevent the poaching of employees. The DOJ and FTC have stated that they intend to make agreements of this nature a priority, and pursue criminal prosecution.

The U.S. antitrust laws aim to encourage competition and protect consumers from anti-competitive business practices, such as price fixing. These laws apply to many different business practices, and include the hiring of employees. Employers may find themselves in violation of antitrust laws if they enter into agreements with other employers, within the same industry, to attempt to limit or fix terms of employment for potential hires.

Background

Over the past few years, the DOJ has brought enforcement actions against prominent technology companies, such as Apple, Google, Intuit, and Pixar. In these cases, the companies each entered into “no poach” agreements with one another, which prevented the companies from reaching out to another’s employees for job positions. The DOJ also found instances where one company agreed to hire only employees who currently worked at a specific competitor.

In addition to the DOJ cases, the FTC has also brought suit for inter-employer agreements. Some of these cases involved agreeing to boycott temporary nurses’ registries to eliminate competition for purchasing nursing services and reducing fees or otherwise changing compensation terms.

The DOJ and FTC have held that agreements between employers need not be reduced to writing in order to violate antitrust laws. Inter-employer agreements can be written or unwritten, formal or informal, and spoken or unspoken. An inference about an agreement may be made as long as there is some sort of understanding regarding terms of employment or hiring between two or more competing employers.

Criminal Liability

In light of these cases, and the effects that inter-employer agreements have on both the market and employees, the DOJ has shifted its enforcement policy from civil to criminal. Although criminal prosecution has always been a possibility, the DOJ would usually pursue only civil liability. The Antitrust Guidance emphasizes this change and affirms the DOJ’s intent to criminally investigate allegations of no-poaching or wage-fixing agreements between employers.

Felony charges may be brought against both the employer and individuals, such as managers or HR personnel. If found guilty, employers could be subject to fines up to $100 million, and individuals could face imprisonment and fines up to $1 million.

Conclusion

Employers may wish to provide training sessions on antitrust laws for management and HR to emphasize the importance of avoiding wage-fixing and no-poaching agreements. Additionally, employers need to include their HR departments in any antitrust audits they conduct so that agreements of this nature may be discovered and stopped.

Prudent employers will ensure that their communications and relationships with other competing employers remain within the parameters of the antitrust laws so that they may avoid costly ramifications and encourage market growth.

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