Wage-Fixing, No-Poaching Agreements to be Prosecuted Criminally under new Antitrust Guidance
On October 20, 2016, the Department of Justice's Antitrust Division (Antitrust Division) and the Federal Trade Commission (FTC) jointly released important Guidance aimed at informing human resource professionals (and others involved in hiring and compensation decisions) on the topic of how the antitrust laws apply to the field of employment.
The DOJ and FTC announced that agreements between companies not to hire each other's employees (no-poaching agreements) and agreements not to compete on salaries or terms of employment (wage-fixing agreements) would be "criminally investigated and prosecuted as hardcore cartel conduct."
To date, both types of agreements, whether entered into directly or through a third-party intermediary, have consistently been considered per se illegal, but have been treated as civil violations of the antitrust laws. Moving forward, the stakes are much higher, with both companies and individual employees facing potential felony convictions for the same conduct.
However, not all interactions or agreements with a competing company or their employees regarding hiring and compensation practices violate the antitrust laws. The new Guidance recognized exceptions to the general rule against no-poaching and wage-fixing agreements and explained that competitors could exchange information regarding hiring and compensation practices through a neutral third party.
With companies and their employees expecting an increasing antitrust scrutiny regarding their hiring and compensation practices, companies across industries should review their hiring policies pre-emptively to avoid compliance and enforcement consequences.