Thursday, October 27, 2022: U.S. Department of Justice Obtained First Successful Labor Market Criminal Antitrust Prosecution
USDOJ Reached Plea Agreement With Employer & Manager on Wage-Fixing & “No-Poach” Conspiracy Charges
Securing its first criminal conviction for labor market antitrust violations, the U.S. Department of Justice (DOJ) obtained a guilty plea and sentence against a Nevada healthcare company on wage-fixing and “no-poach” conspiracy charges. The company – VDA OC LLC (VDA), previously known as Advantage On Call, LLC – was one of two primary providers of contract nursing services for a public school district in Nevada. Under an agreement with the USDOJ, the company pleaded guilty to entering into and engaging in a conspiracy with a competitor to allocate employee nurses and to fix the wages of those nurses.
According to the plea agreement, from about October 2016 until July 2017, VDA, through one of its regional managers, participated in a conspiracy with another contract healthcare staffing firm to suppress and eliminate competition by agreeing to not hire nurses from each other and fix the wages of those nurses. Earlier this year, a federal grand jury in Las Vegas, Nevada indicted VDA and the manager on the one-count felony charges of “Conspiracy in Restraint of Trade” in violation of the Sherman Act (15 U.S.C. Section 1).
Following the company’s guilty pleas, Judge Richard F. Boulware II of the U.S. District Court for the District of Nevada sentenced the company to pay a criminal fine of $62,000 and restitution of $72,000 to victim nurses. The individual manager was neither fined nor jailed. A violation of the Sherman Act carries a statutory maximum penalty of 10 years in prison and a $1 million fine for individuals and a maximum penalty of a $100 million fine for corporations. Courts may increase the maximum fine to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than the statutory maximum.
How Did We Get Here?
In their joint October 2016 “Antitrust Guidance for Human Resource Professionals,” the USDOJ and Federal Trade Commission (FTC) detailed the type of employer actions that may lead to criminal charges. “An agreement among competing employers to limit or fix the terms of employment for potential hires may violate the antitrust laws if the agreement constrains individual firm decisionmaking with regard to wages, salaries, or benefits; terms of employment; or even job opportunities.”
“It is unlawful for competitors to expressly or implicitly agree not to compete with one another, even if they are motivated by a desire to reduce costs,” the 10-and-a-half-page document also cautions. The guidance further explains that an employer is “likely [] breaking the antitrust laws if it:
- agrees with individual(s) at another company about employee salary or other terms of compensation, either at a specific level or within a range (so-called wage-fixing agreements), or
- agrees with individual(s) at another company to refuse to solicit or hire that other company’s employees (so-called “no poaching” agreements).”
Employer Wage-Fixing & No-Poaching Agreements Are Illegal Even Without Competitive Effects
“Naked wage-fixing or no-poaching agreements among employers, whether entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws,” the guidance points out. “That means that if the agreement is separate from or not reasonably necessary to a larger legitimate collaboration between the employers, the agreement is deemed illegal without any inquiry into its competitive effects.” Legitimate joint ventures, such as “appropriate” shared use of facilities are not considered per se illegal under the antitrust laws, the agencies explained.
Despite Setbacks, USDOJ and the U.S. Federal Trade Commission are Actively Pursuing Similar Cases
On April 14, a federal jury in Texas acquitted the former clinical director of a physical therapist staffing company of charges of wage-fixing. However, the jury convicted the owner of obstructing the FTC’s investigation. The following day, a federal jury in Colorado acquitted kidney dialysis company DaVita Inc and a former chief executive officer on DOJ “no-poach” charges alleging they conspired with three other companies not to hire each other’s senior-level employees.
Nevertheless, following these verdicts, Assistant Attorney General for the DOJ Antitrust Division Jonathan Kanter was not deterred, stating in an event in Chicago: “We’re going to continue to bring the cases — we’re not backing down.”
“Protecting workers from antitrust schemes – such as wage-fixing and employee allocation – remains a priority for the U.S. Attorney’s Office,” said U.S. Attorney Jason M. Frierson for the District of Nevada in a press statement on the VDA plea agreement. “We are committed to working with the Antitrust Division and FBI to prosecute anticompetitive conduct that affects opportunities for workers and the labor market.”
Reminder: Justice Department Inked Agreements on Antitrust With USDOL & NLRB
In March, we reported that “USDOL Signed MOU to Report to USDOJ Employers Pursuing ‘No-Poach’ Recruitment Agreements And/Or Conspiring to Fix Wages.” We also reported that in late July, the “NLRB and Justice Department Signed New Partnership Agreement To Focus on Antitrust.”