On Jan. 16, 2025, the U.S. Department of Justice and the Federal Trade Commission jointly issued new Antitrust Guidelines for Business Activities Affecting Workers, replacing the 2016 Antitrust Guidance for Human Resource Professionals. The new guidelines outline how both agencies identify and assess business practices affecting workers that may violate the antitrust laws, and reflect that investigating and challenging anticompetitive hiring, compensation and employment practices remains a priority for federal antitrust enforcers.
The new guidelines go far beyond the agencies’ 2016 guidance and address additional business practices that may expose employers to liability under the antitrust laws or other federal and state statutes. The first five sections address specific agreements or practices that may violate antitrust laws and give rise to criminal or civil liability. In addition to “no-poach” and “wage-fixing” agreements and information exchanges that were the focus of the agencies’ 2016 guidance, the new guidelines discuss other practices that the agencies may seek to challenge. Section 6 clarifies that the antitrust laws also apply to relationships between businesses and independent contractors, and section 7 explains that false claims about potential earnings may run afoul of laws prohibiting unfair, deceptive or abusive practices. Section 8 explains how members of the public may report potential antitrust violations to the agencies.
Each section of the new guidelines is summarized below.
1. Certain agreements among employers, including wage-fixing and no-poach agreements, may violate antitrust laws and lead to criminal charges.
Businesses that compete for workers (even if they do not compete in the products or services they sell to consumers) may violate the antitrust laws if they agree not to recruit, solicit or hire workers from one another or agree to fix wages or other forms of compensation or terms of employment. Such arrangements are sometimes called “no-poach” or “wage-fixing” agreements. The DOJ may initiate criminal investigations and bring felony charges against the participants in these agreements, including both individuals and companies, and both agencies may pursue civil enforcement actions.
The guidelines note that such agreements are illegal even if they did not cause actual harm, such as lower wages. The guidelines further note that the scope of what may constitute a no-poach or wage-fixing agreement is broad. For example, companies may violate the antitrust laws if they agree to restrict the ability to hire each other’s workers, even if they are not completely prohibited from hiring from one another, or if they agree to align, stabilize or coordinate the wages they set, even if they do not set a specific wage.
2. Franchise no-poach agreements may violate antitrust laws.
Clauses in franchise agreements in which the franchisor and franchisee agree not to compete for workers or agreements among franchisees not to poach, hire or solicit each other’s workers may violate antitrust laws, regardless of whether they cause harm to workers.
3. Exchanges of competitively sensitive information among companies that compete for workers may violate antitrust laws.
Companies that compete for workers may violate antitrust laws by sharing competitively sensitive information if the information exchange has, or is likely to have, an anticompetitive effect. Examples of information that may harm competition for workers if shared include sensitive information about compensation or other terms or conditions of employment. In addition to direct information exchanges among competitors, sharing competitively sensitive information through a third party, algorithm, tool or product may also be unlawful. Likewise, sharing competitively sensitive information with a third party, algorithm or software that generates wage or other benefit recommendations based on such information can create antitrust risk, even if the competitors are not required to follow those recommendations.
The guidelines also note that exchanges of competitively sensitive information about compensation or other terms or conditions of employment may indicate to the agencies that a wage-fixing conspiracy exists.
4. Noncompete clauses can violate antitrust laws and other statutes.
The agencies continue to focus on challenging noncompete clauses that restrict workers from switching jobs or starting a competing business. The guidelines state that noncompetes and other restraints on worker mobility that limit competition can violate antitrust laws and other federal and state statutes. Although the U.S. District Court for the Northern District of Texas issued an order last year setting aside the FTC’s final rule banning most noncompete agreements, the agencies may nonetheless investigate and take action against noncompetes on a case-by-case basis.
5. Other restrictive, exclusionary or predatory employment conditions can be unlawful.
Other restrictive agreements that impede worker mobility or undermine competition may, under certain circumstances, violate antitrust laws or other federal or state laws and prompt the agencies to investigate and challenge. These agreements include nondisclosure agreements, training repayment agreement provisions, nonsolicitation agreements and exit-fee and liquidated-damages provisions. According to the agencies, these restrictions can harm competition if they are broad enough to prevent workers from seeking or accepting better, higher-paying work or starting a business after they leave their job.
6. Antitrust laws apply to agreements that businesses reach with independent contractors.
Antitrust laws also prohibit anticompetitive behavior aimed at independent contractors, not just employees. As an example, the guidelines highlight technology platforms, such as smartphone apps, that use independent contractors rather than employees to match workers who provide labor with consumers seeking their services. An agreement between two or more competing platforms to fix the compensation of independent contractors offering their services via the platforms would violate antitrust laws no less than if the agreement fixed compensation of employees.
7. False earnings claims can violate federal laws against unfair, deceptive or abusive practices.
The agencies may investigate and bring enforcement actions against businesses for making false or misleading claims about a worker’s potential earnings. For example, the FTC has sued companies for falsely advertising that workers would earn substantially more in compensation and/or tips than the workers actually earned.
8. Reporting of potential violations encouraged.
Lastly, the guidelines encourage members of the public to report potential antitrust violations to the agencies and outline how they may do so.
It remains to be seen whether the new guidelines, issued in the waning days of the Biden administration, will be short-lived. The FTC’s incoming chair, Commissioner Andrew N. Ferguson, and fellow Republican Commissioner Melissa Holyoak released a dissenting statement the day the new guidelines were released, asserting that “the Biden-Harris FTC announcing its views on how to comply with the antitrust laws in the future is a senseless waste of commission resources” because “[t]he Biden-Harris FTC has no future.”
Even if the new guidelines are withdrawn, applying the antitrust laws to the labor market has remained a consistent enforcement priority for the agencies since the 2016 guidelines, which were unanimously approved by the FTC. Thus, it is important for employers to be aware of the business practices affecting workers that the DOJ and FTC may investigate and seek to challenge under the antitrust laws. The agencies have brought multiple investigations and enforcement actions in recent years challenging hiring, compensation and employment practices.
