New Federal Guidance on the Application of Antitrust Laws to Employers—What Employers Need to Know

New Federal Guidance on the Application of Antitrust Laws to Employers—What Employers Need to Know

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) in October 2016 issued new antitrust guidance for human resources professionals.  Many business owners and HR professionals may not be aware of the potential consequences for engaging in antitrust violations.  The risk is compounded given that antitrust laws may be overlooked in the context of employment decisions.

The new guidance has its origins in several recent actions taken by the DOJ and FTC against companies found to be engaging in anticompetitive conduct with respect to their employees. In one high profile case, several tech companies—including Apple, Adobe, Google, Intel, Intuit, and Pixar—were accused of violating antitrust laws by agreeing not to recruit each other’s employees, by agreeing to notify each other when making an offer to another company’s employee, and by agreeing not to counter any offer for employment to another company’s employees. This had the effect of artificially depressing wages for many tech workers. The DOJ’s investigation resulted in the entry of a consent decree against the companies. The affected employees later filed a class action, which resulted in a settlement of more than $400,000,000.

As the new guidance makes clear, the DOJ and FTC will initiate both criminal and civil proceedings to enforce the antitrust laws as they apply to the market for employee services. Examples of agreements between competitors that may come under scrutiny include:

  • No-poaching agreements—i.e., agreeing with a competitor not to hire each other’s employees
  • Wage-fixing agreements
  • Agreements to cap wage increases for certain employee groups
  • “Gentlemen’s agreements” or other verbal agreements not to recruit a competitor’s employees
  • Agreements to reduce employee benefits
  • Sharing certain wage information with competitors

Employers should keep in mind that conduct that is permissible if done independently, may not be lawful if taken in conjunction with another company. For instance, while it is certainly acceptable for an employer to unilaterally decide to change a benefit like free parking for employees, it would likely violate the antitrust laws to agree with a competitor that both companies would change or eliminate the same benefit.

Employers should also not assume that a company in another industry would not be considered a “competitor” under the antitrust laws. This is because employers compete for workers’ services and so are in the market for employees—even if the type of product or service they sell is different.

If you have questions about how the antitrust laws impact your company’s decision-making, contact qualified counsel to assist you with your specific situation. You may contact Ms. Pratt at kmlp@bhgrlaw.com.

 

This article is intended to provide general information and, therefore, should not be treated as legal advice. If you have questions about a specific legal issue, you should seek the advice of a qualified attorney.

Author: Katie Pratt