Antitrust laws prohibit price fixing among competing sellers, but those same laws also apply to buyers. Since every company with employees is a “buyer” of employees’ services, federal regulators are reminding businesses that the antitrust laws apply to agreements relating to the buying of those services – irrespective of whether the employers sell competing products or provide competing services.
The types of “employee” agreements that can raise antitrust concerns are:
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Wage and Benefits Agreements
Agreements between two or more independent companies concerning wages, salaries, benefits, other compensation or terms or conditions of employment (outside of collective bargaining)
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Nonsolicitation Agreements
Agreements in which two or more independent companies agree not to solicit or hire each other’s employees
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Salary Information Exchanges
Agreements between or among two or more independent companies to exchange current or prospective compensation (wages, benefits, terms and conditions) information
In October 2016, the nation’s two leading antitrust enforcers – the Federal Trade Commission and the U.S. Department of Justice’s Antitrust Division – published Antitrust Guidance for Human Resources Professionals.[1] The objective was to put employers and HR personnel on notice that the antitrust laws will be strictly enforced to prevent agreements that restrain competition in the employment market.
Specifically, the HR Guidance confirmed that certain types of wage-fixing and no-poaching agreements[2] will be treated as per se violations,[3] which, in certain instances, will be prosecuted as criminal antitrust violations. Where appropriate, this may include, bringing felony charges against the companies involved as well as the responsible individuals.[4]
Employers must carefully navigate these troubled waters. The continued enforcement focus of both antitrust agencies in this area, in the face of increasing employee turnover and the difficulties of retaining top talent, demand a thoughtful approach and the advice of experienced antitrust counsel.
[2] No-poaching agreements are also called no-hire, no-interference, nonsolicitation, or no-switching agreements, depending on the circumstances.
[3] Conduct that is per se illegal is deemed illegal without an inquiry into its competitive effects.
[4] Criminal antitrust penalties include: (1) corporate fines of up to $100 million per violation or twice the sum as a result of violation (whichever is higher); (2) individual criminal fines of up to $1 million; and (3) up to 10 years jail time.
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