HR Personnel (and Employers) Beware: Antitrust Enforcers Warn of Criminal Liability For Compensation, No-Poaching Pacts

Bass, Berry & Sims PLC

Bass, Berry & Sims PLC

Human Resources (HR) personnel are now specifically under the scrutiny of the antitrust enforcement agencies. The Department of Justice (DOJ) and Federal Trade Commission (FTC) are typically known for enforcing antitrust laws against price-fixers and bid-riggers. Recently they announced a new set of targets: anti-competitive agreements between employers related to hiring and compensation. For the first time, these agencies have warned HR personnel and their employers they may be criminally prosecuted for agreeing with other companies to fix employee pay (wage-fixing agreements) or not to recruit each other’s employees (no-poaching agreements). Criminal violations of the antitrust laws are felonies and threaten substantial fines and jail time.

The DOJ and FTC published guidance cautioning HR personnel and others involved in hiring and compensation decisions that the antitrust laws will be aggressively enforced, both civilly and criminally, against no-poaching agreements, wage-fixing agreements, and other anti-competitive employment agreements. According to the DOJ and FTC, these types of agreements eliminate competition in the employment market as price-fixing agreements eliminate competition for the sale of goods and services. The agencies also reminded HR personnel of the dangers of sharing sensitive employment information with competing employers, like compensation or other terms or conditions of employment, since such practices are also subject to antitrust laws when they have anti-competitive effects on the employment market.

HR personnel are being targeted because they are in the best position to ensure that their hiring and compensation practices are antitrust compliant. The DOJ and FTC encourage HR personnel to implement safeguards to prevent inappropriate discussions or agreements with other employers seeking to hire the same employees. The agencies also provided a list of “red flags” indicating suspicious antitrust behavior that HR personnel should look out for in their day-to-day work.1

The Bottom Line

Employers and HR personnel are now on notice they may be charged and held criminally responsible for anti-competitive employment agreements and practices. This news may come as a surprise to those who may not typically think their job responsibilities could violate antitrust law. Because of the DOJ and FTC’s strong and unusual announcement, employers and HR departments should recognize this “shot across the bows,” and carefully review their hiring and compensation practices to ensure they are not potentially in violation of antitrust law. Similarly, while employers frequently discuss antitrust compliance in their officer and employee training programs, they should now be sure to include HR personnel and these new guidelines in those discussions.

1 A copy of these red flags may be found here.

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.

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