On Thursday, October 20, 2016, the U.S. Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ) jointly released Antitrust Guidance for Human Resources Professionals (guidance) to explain how antitrust law applies to employee hiring and compensation practices. The guidance advises that going forward the DOJ intends to investigate criminally companies who agree with competitor(s) to fix wages or other terms of employment or enter into so-called “no-poaching” agreements by agreeing not to recruit each other’s employees. The DOJ explained that such agreements eliminate competition in “the same irredeemable way” as agreements to fix the price of goods or allocate customers, and noted that agreements that do not constitute criminal violations may nevertheless lead to civil liability under the statutes enforced by both the DOJ and FTC.
The guidance makes clear that illegal no-poaching or wage-fixing agreements need not be formal, written, or even spoken in order to be subject to antitrust enforcement. Rather, an agreement can be inferred from circumstantial evidence — such as evidence of discussions and parallel behavior. The guidance also addresses the legality of competitors exchanging sensitive information regarding the terms and conditions of employment, warning that the exchange of this type of information among competitors may amount to a violation of antitrust laws even without an explicit agreement.
The guidance offers suggestions for businesses to engage in information exchanges in ways that comply with the law, such as by exchanging aggregated, relatively old information through a neutral third party. Most helpful to HR professionals, the guidance includes a Q&A section regarding answers to common scenarios faced by HR professionals. The agencies also distributed Antitrust Red Flags for Employment Practices, which serves as a quick reference for HR professionals to detect warning signs of potentially illegal employment practices, such as participation in trade association meetings discussing the hiring, compensation, or competition for employees.
