The chief prosecutor in the U.S. Department of Justice’s Antitrust Division signaled last week that his unit expects to initiate criminal actions against multiple companies accused of entering unlawful pacts not to hire each other’s employees. Such action would fulfill earlier promises, by both the Trump and Obama Administrations, to treat employment-related antitrust violations with the same seriousness afforded to more traditional, consumer-based antitrust issues.
The public often thinks of price-fixing and other consumer-focused schemes as “traditional” antitrust violations. However, it can be similarly unlawful for companies to form agreements that suppress the opportunities of employees. On October 20, 2016, the Department of Justice and Federal Trade Commission published Antitrust Guidance for Human Resource Professionals, cautioning employers that agreements with other companies to limit the wage rates of similar types of workers, or not hire each other’s workers, are unlawful and would be subject to criminal prosecution. Among other things, the Guidance cautions employers on sharing wage information under some circumstances.
Less than one month after the above-referenced guidance was issued, Donald Trump was elected President. Despite the change of Administration, the Antitrust Division has indicated that it fully intends to continue the charge against wage-fixing and no-poaching agreements.
On January 19, 2018, the lead attorney of the Antitrust Division, Makan Delrahim, discussed the Division’s position toward no-poaching agreements during a conference hosted by the Antitrust Research Foundation at George Mason University’s Antonin Scalia Law School. During the presentation, which Law 360 reported later that day, Mr. Delrahim told attendees that the Division would be initiating multiple criminal prosecutions “[i]n the coming couple of months[.]” Not surprisingly, he did not share the names of any companies that the Division intended to charge in those actions.
The Antitrust Division’s interest in criminal prosecutions represents a continuation from the Obama Administration. Nevertheless, Mr. Delrahim identified one way in which the Division intended to diverge from the prior Administration. Specifically, the Division intends to move away from consent agreements that implement behavioral remedies, and look more closely at structural remedies such as divestitures. As Mr. Delrahim explained, behavioral remedies create a need for continuing administrative oversight. Further, even with the additional oversight they still can be extremely difficult to enforce. On the other hand, by requiring changes to a company’s corporate structure, the Division can reduce a company’s ability to violate antitrust law, with or without costly monitoring.
On November 9, 2016, we published an article discussing the above-referenced Guidance for Human Resource Professionals. We will provide further updates as any of the anticipated criminal actions are announced. Companies seeking to ensure their compliance with employment-based antitrust laws are encouraged to contact a member of Jackson Lewis’s Non-Competes Practice Group for guidance.