DOJ, FTC Announce Plans to Criminally Prosecute Employers That Enter into Wage-Fixing or No-Poaching Agreements

by Franczek Radelet P.C.

Franczek Radelet P.C.

In the fiercely competitive market for talent, human resources personnel and recruiters inevitably feel the competing pressures of offering compensation packages that are attractive to potential employees and keeping costs under control. To find the appropriate balance, they may feel tempted to share information with their counterparts at competing organizations and/or reach agreements with them not to recruit one another’s employees.

Responding to this issue, last month the U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) issued Antitrust Guidance for Human Resource Professionals (Guidance), which provides valuable insight into conduct these agencies consider illegal. The guidance describes two types of antitrust violations, which are typically illegal regardless of whether they have an anticompetitive effect:

  • Naked wage-fixing agreements, in which individuals from different companies make an agreement about employee salaries or other terms of compensation, either at a specific level or within a range; and
  • Naked no-poaching agreements, in which individuals from different companies agree not to solicit or hire one another’s employees.

The most well-known civil enforcement actions brought by the DOJ to date have been against some of the country’s largest technology companies (including Google, Apple, and Intel), which entered into “no-poach” agreements to limit their cold calling and hiring of each other’s employees.

What is notable about the Guidance is the DOJ’s announcement that it will now proceed with criminal investigations and prosecutions of those entering into such agreements. The DOJ regards naked wage-fixing and no-poach agreements as anticompetitive in the same way as agreements to fix prices or allocate customers, which have been criminally investigated and prosecuted as anticompetitive cartel conduct. Both companies and individual employees may be liable for antitrust violations in such situations.

The Guidance also explains that exchanging sensitive information – even absent an explicit agreement – may serve as evidence of an implicit illegal agreement. Although such agreements to share information are not subject to criminal prosecution, they may be subject to civil antitrust liability when they have or are likely to have anticompetitive effects.

Helpfully, the Guidance offers suggestions on how companies may lawfully share information, and provides a link to a list of “red flags” to help HR professionals and other managers avoid engaging in anticompetitive activity.

One type of “no-poaching” agreement that the Guidance does not address are agreements between staffing agencies and their clients. Such agreements often limit the ability of a client to independently hire personnel that are provided by the staffing agency with certain time and geographic limitations. State courts have varied in their treatment of such agreements. For instance, the Wisconsin Supreme Court held in 2002 that a no-hire agreement was unenforceable because the employee was not a party to the contract, and this was a restriction on the employee’s individual right and freedom to contract. In contrast, the Illinois Supreme Court held in 2004 that a narrowly drawn restriction that prevented a client from hiring only those employees provided by a staffing agency for a year after the termination of the agreement governing assignment of the employee to the client was a reasonable restriction on trade that was justified by the legitimate business interests of the staffing agency, notwithstanding the fact that the employee was not a party to the agreement. To date, courts do not appear to have analyzed such no-hire agreements under antitrust principles.

Although staffing agency arrangements are not specifically addressed by the Guidance, the Guidance does explain that employers that compete to hire or retain the same employees are “competitors” from an antitrust perspective, regardless of whether the companies make the same products or provide the same services.  Since staffing agencies and their clients could be said to “compete” for employees, “no-poaching” agreements with staffing agencies are not necessarily immune from antitrust scrutiny.

Although the Trump administration could roll back this stepped-up enforcement agenda, the DOJ’s position fits within established antitrust principles and maintaining no poaching agreements or sharing wage information could create exposure through private lawsuits regardless of how aggressive the incoming administration pursues antitrust enforcement. HR professionals are in a position to implement safeguards to ensure that their companies do not run afoul of antitrust laws when recruiting employees, and should seek the advice of counsel before entering into an agreement that could restrict employee recruitment or sharing employee compensation information with other employers.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Franczek Radelet P.C. | Attorney Advertising

Written by:

Franczek Radelet P.C.

Franczek Radelet P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.