In late October, the Federal Trade Commission and the Antitrust Division of the United States Department of Justice warned human resources professionals that so-called “no-poaching” agreements, in which companies agree not to recruit each other’s employees, and agreements between companies to set salaries, benefit levels, or other terms of employment can expose companies to civil liability and even criminal prosecution under federal antitrust laws.

The release of the FTC-DOJ joint Antitrust Guidance for Human Resources Professionals alerted human resource professionals and others involved in hiring to potential antitrust issues that arise in employment situations because HR executives are frequently best able to make sure that hiring and compensation actions and decisions do not violate the law.

The joint Guidance explains that, where companies which ordinarily compete with one another to hire and retain employees instead agree to fix wages or other terms of employment, or agree to no-poaching arrangements, workers can unlawfully lose the benefit of having a competitive market for their services.

The federal agencies emphasized that, for the purpose of the antitrust laws, being a competitor in the employment arena is broader than simply other companies that provide the same service or make the same products. A company can make an illegal agreement with a company in another industry if both companies compete for the same type of employees.

The Guidance also warned companies to avoid sharing employment-related information such as current salaries and benefit levels directly with competitors in the labor market because exchanging competitively sensitive information could be seen as evidence of an implicit illegal agreement. However, some information exchanges may be allowed if, for example, a neutral third-party manages the exchange, non-current information is used, the information is reported in an aggregated format that does not identify its source, and an aggregated report includes enough sources so that the information cannot be linked to a particular source.

A helpful Question and Answer section addresses situations in which potential antitrust issues may arise in a human resource professional’s work and explains appropriate responses. The Guidance also has a link to a postcard-sized list of antitrust red flags that arise in the employment arena.

The Guidance announced that the DOJ will criminally investigate naked no-poaching or wage-fixing arrangements that are not justified by legitimate collaboration between the employers. Even arrangements that do not rise to the level of criminal violations may be pursued under the civil liability provisions of the federal antitrust laws.

The joint Guidance is available at this link.