In October 2016, the Antitrust Division of the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued an eleven-page joint guidance document entitled “Antitrust Guidance for Human Resource Professionals” (“the Guidance”).1 Directed at human resource professionals, the Guidance reaffirmed the two antitrust agencies’ stance that antitrust laws apply with equal force to firms that compete to recruit and retain the same employees, irrespective of whether those firms compete in the same product or service market. In pertinent part, the Guidance asserted that “naked” agreements (i.e., facially anti-competitive agreements that lack pro-competitive justifications) between competitors in an employment market to fix wages or to not “poach” employees from one another constitute per se violations of the antitrust laws. Per se violations of the antitrust laws can be pursued criminally by the DOJ, and, recently, there has been a notable increase in this type of enforcement action.
On July 15, 2021, the DOJ Antitrust Division announced its most recent indictment in this pattern of enforcement actions involving labor market collusion. A federal grand jury in Denver, Colorado, returned a two-count indictment against DaVita, Inc. and its former CEO for conspiring with two competing employers not to solicit high-level employees. The DOJ previously indicted one of DaVita’s co-conspirators, Surgical Care Affiliates, LLC, on similar charges in January. The alleged schemes, which began as early as 2012, not only involved agreements between the entities not to solicit high-level employees but also agreements not to hire co-conspirators’ senior-level employees absent permission from their current employer. The DOJ announced that these indictments were part of an ongoing investigation into labor allocation agreements in the healthcare industry.2
In United States v. Surgical Care Affiliates, LLC and SCAI Holdings LLC (No. 3-21-CR00011-L (N.D. Tex. Jan. 5, 2021), which parallels the allegations in DaVita, the defendants were also indicted under the “no-poach” theory for violating Section 1 of the Sherman Act.3 This indictment marked the first time the DOJ brought criminal charges based on a “no-poach” agreement. As with DaVita, the indictment alleges that the defendants illegally agreed with two competitors not to solicit each other’s senior-level employees. A superseding indictment was issued on July 8, 2021; however, it contains substantially the same allegations and adds no new defendants.
While DaVita is the most recent example, and Surgical Care Associates represented the first criminal prosecution of a “no-poach” agreement, the DOJ also recently brought similar indictments based on per se antitrust violations in the healthcare industry. In United States v. Neeraj Jindal (No. 4:20-cr-00358 (E.D. Tex. Dec. 9, 2020), the defendant owned a therapist staffing company and was indicted for violating Section 1 of the Sherman Act by agreeing with his co-conspirators to fix lower pay rates for physical therapists and physical therapy assistants. The DOJ also indicted the defendant for obstruction, for filing false statements, and withholding information from the Federal Trade Commission (“FTC”) during the course of its investigation. It is not unusual for the FTC to refer a potential criminal matter to the DOJ, as the FTC does not have criminal authority. However, this was the DOJ’s first criminal case involving allegations of illegal wage negotiation or suppression. On April 19, 2021, a federal grand jury returned a superseding indictment that added an additional defendant to this matter, John Rodgers, the director of a Texas-based therapist staffing company.
What Types of Agreements Are Considered Per Se Violations Subject to Criminal Liability?
The Guidance noted above highlights two types of anti-competitive agreements that, without any pro-competitive justification, likely give rise to a per se violation of the antitrust laws:
- “Wage-Fixing” Agreements – Agreements pertaining to employee salary or other terms of compensation.
- “No-Poaching” Agreements – Agreements to refuse to solicit or hire another company’s employees.4
The Guidance cited to prior civil enforcement actions pertaining to such wage-fixing and no-poaching agreements, including three separate civil suits brought against Silicon Valley technology companies for agreeing with competitors not to cold call each other’s employees. The Guidance makes clear that “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.”5
What Kinds of Employment Practices May Lead to an Antitrust Violation?
In conjunction with the Guidance, DOJ and FTC published a corresponding “cheat sheet” document entitled “Antitrust Red Flags for Employment Practices.”6 The two-page document cautioned HR professionals that “antitrust concerns may arise” if the manager, HR professional, or any employee is engaged in any of the following practices:
- Agreeing with another company about employee salaries, benefits, other terms of compensation, or terms of employment;
- Agreeing with another company to refuse to solicit or hire that company’s employees, or expressing to competitors that neither company should compete too aggressively for the other’s employees;
- Exchanging company-specific information about employee compensation or terms of employment with another company;
- Participating in a meeting, such as a trade association meeting, where any of the above topics are discussed, or discuss the above topics with colleagues at other companies (even during social events or in other non-professional settings);
- Receiving documents that contain another company’s internal data about employee compensation.7
Additionally, on July 9, 2021, President Biden issued an “Executive Order on Promoting Competition in the American Economy.” The Order focuses on antitrust issues and contains provisions directly affecting labor and employment issues, including efforts to address wage collusion and agreements that limit workers’ ability to change jobs.
Specifically, President Biden requested that the FTC exercise its rulemaking ability to curtail the use of non-compete clauses and other agreements that may unfairly limit worker mobility. The Order further establishes a White House Competition Council to promote efforts to address unfair competition, encourages enforcement efforts by the Attorney General, and seeks to promote competition in a variety of industries, including telecommunications, transportation, and agriculture.
Despite the fact that the FTC was requested to exercise its discretion and related efforts to discourage anticompetitive behavior outside of enforcement actions, it is clear that the Biden DOJ continues to pursue these matters on a criminal basis.
In light of recent actions by the DOJ, it appears there is a new focus on combating wage-fixing and no-poach agreements through criminal indictments. This trend will likely continue throughout the Biden administration, as the DOJ works in conjunction with other executive agencies to combat anti-competitive behaviors that limit worker opportunity.
 Department of Justice, “Antitrust Guidance for Human Resource Professionals,” (Oct. 2016) [hereinafter, “Guidance”], available at https://www.justice.gov/atr/file/903511/download.
 See Department of Justice, Office of Public Affairs, July 15, 2021.
 It is unclear from the indictments why the DOJ elected to charge DaVita’s former CEO, but did not charge any individuals from Surgical Care Associates. However, the DOJ at times elicits cooperation from individuals in exchange for an agreement not to prosecute, which may have occurred in this case. Notwithstanding, frequently the DOJ will require a plea of guilty along with cooperation in order to receive a reduced sentence.
 Guidance, supra n.1, at 3.
 Department of Justice, “Antitrust Red Flags for Employment Practices” (Oct. 2016), available at https://www.justice.gov/atr/file/903506/download.