At the end of October, the U.S. Department of Justice Antitrust Division (DOJ) and Federal Trade Commission (FTC) communicated a significant shift in their enforcement guidance regarding competition among employers to limit or fix terms of employment for potential hires. In a new publication, Antitrust Guidance for Human Resource Professionals, the DOJ announced its intent to investigate, and criminally prosecute, wage fixing and no-poaching agreements. Wage fixing agreements include agreements where individuals at different companies (or members of trade associations) agree to fix employee salaries or other terms of compensation at a specific level or within a range. No poaching agreements include agreements between companies not to solicit or hire each other employees.
In its announcement, the DOJ announced that:
Going forward the DOJ intends to proceed criminally against naked wage-fixing or no-poaching agreements. These types of agreements eliminate competition in the same irredeemable way as agreements to fix produce prices or allocate customers, which have traditionally been criminally investigated and prosecuted as hardcore cartel conduct.
That announcement that the DOJ intends to investigate and prosecute criminally these kinds of violations should make managers, supervisors and HR professionals take note and refresh their knowledge on the employment practices that could make the employee a target of a federal criminal investigation. Some of the potential issues are not readily apparent such as a company’s (including non-profit’s) participation in or use of wage survey information or informal sharing of compensation information with other companies. The DOJ published a short summary of the potential red flags employers should be mindful of in Antitrust Red Flags for Employment Practices. The enforcement guidance also provide a number of hypothetical situations and its interpretation about whether each would result in a potential antitrust violation.
Since the government intends to criminally prosecute employers and individuals entering into no-poaching and wage fixing agreements, this is something that should be taken seriously.