HR Professionals Take Note: DOJ and FTC Issue Guidance Regarding Antitrust Laws in the Employment Context

Seyfarth Shaw LLP

Seyfarth Synopsis: On October 20, the DOJ and the FTC jointly issued their Antitrust Guidance for HR Professionals, stating that DOJ intends to pursue employers criminally for alleged wage fixing and no-poaching agreements.  

On October 20, 2016, the DOJ and FTC jointly issued their “Antitrust Guidance for Human Resource Professionals.”  The Guidance explains how antitrust law applies to employee hiring and compensation practices.  The agencies also issued a “quick reference card” that lists a number of “antitrust red flags for employment practices.”

In a nutshell, agreements (whether formal or informal) among employers to limit or fix the compensation paid to employees or to refrain from soliciting or hiring each other’s employees are per se violations of the antitrust laws.  Also, even if competitors don’t explicitly agree to limit or suppress compensation, the mere exchange of compensation information among employers may violate the antitrust laws if it has the effect of suppressing compensation.

The seriousness of this issue is underscored by the agencies’ statements in their press releases that the guidance is aimed at putting companies on notice that DOJ will proceed criminally against wage fixing and no-poaching agreements.  There also has been a significant uptick in recent years in class action litigation and enforcement activity challenging antitrust violations in the employment context.  In one exchange of wage information case in Detroit, a group of hospitals paid a total of $90 million to settle the case, and in one consolidated case involving allegations of agreements among employers not to poach each other’s employees, the defendants settled for a total of $435 million.

The evidence in many of these cases demonstrates that many HR professionals and other managers and executives do not realize that the antitrust laws apply in the employment marketplace just as they do in the commercial marketplace.  It is important that those HR professionals and other managers and executives who are involved in recruiting, hiring or the compensation process have a clear understanding of antitrust requirements as applied to those practices.

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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