Oct. 28, 2016 New Antitrust Guidance for HR Professionals
The Department of Justice and the Federal Trade Commission have joined forces to further target antitrust activity among employers. The “Antitrust Guidance for Human Resources Professionals”, issued on October 20, 2016, describes an aggressive new policy that could subject employers and their human resources professionals to both criminal and civil liability for engaging in conduct that limits employee recruitment or retention. The Guidance follows the DOJ’s recent string of civil enforcement actions and employee antitrust suits brought against employers from all industries, including technology, fashion and healthcare.
The Guidance focuses on three types of antitrust violations:
(1) Wage fixing agreements among employers or a third-party intermediary to fix employee compensation or other terms or conditions of employment at either a specific level or within a range;
(2) Agreements among employers or a third-party intermediary to not solicit or hire one another’s employees (“no poaching agreements”); and
(3) Unlawful information exchanges of “competitively sensitive information” that could foster wage matching among the participants or markets (e.g., hospitals matching nurses’ wages based on info provided by healthcare HR group).
Notably, the Guidance states that suspect agreements do not have to be formal, written, or even spoken to be subject to antitrust laws. The DOJ also threatens felony charges against both companies and individuals who enter into “naked” wage-fixing or no poaching agreements (i.e., those that are not necessary to a “larger legitimate collaboration” between the employers). Criminal liability has not, however, been extended to the illegal sharing of employment information between competitors.
The Guidance includes a Q&A section with seven hypothetical situations that might be considered as potential antitrust violations, including some fairly common scenarios. It also links to a list of nine non-exhaustive employment practices that are antitrust “red flags.” The Guidance also identifies a handful of limited exceptions for when an exchange of information could be lawful, such as when “enough sources are aggregated to prevent competitors from linking particular data to an individual source.”
What This Means
The agencies’ recent prosecutorial activity and this Guidance clearly signal their intention to attack hiring practices that limit competition among employers seeking to hire or retain the best workers. Employers, and their HR professionals, should read this Guidance carefully to understand the agencies’ expectations regarding prohibited conduct, particularly since the consequences can include both personal civil and criminal liability.
This E-Update was authored by Dani Nguyen Franke. For more information, please contact Ms. Franke or any other Paul, Plevin attorney by calling (619) 237-5200.