Second Criminal No-Poach Case Brought by DOJ

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On January 7, 2021, the Antitrust Division of the U.S. Department of Justice announced a two-count indictment of Surgical Care Affiliates LLC (“SCA”), which owns and operates outpatient medical care centers across the country.

The two-count indictment, filed in the U.S. District Court for the Northern District of Texas, charges SCA with entering into two conspiracies in violation of Section 1 of the Sherman Act. The indictment alleges that the first conspiracy between SCA and a company based in Texas occurred between May 2010 and October 2017 and was an agreement not to solicit each other’s senior level employees. The indictment also alleges a conspiracy that began in February 2012 and ran through July 2017 between SCA and a company in Colorado to allocate senior level employees through a non-solicitation agreement.

The indictment is on the heels of the DOJ Antitrust Division’s first wage fixing indictment last month of Neeraj Jindal, a former owner of a therapist staffing company, for a criminal conspiracy to fix wages paid to physical therapists and assistants in north Texas.

In October 2016, the DOJ and the FTC released their joint Antitrust Guidance for Human Resource Professionals, alerting employers of potential antitrust violations in hiring and compensation decisions. The Guidance expressly cautioned against “no poach” agreements and wage fixing agreements between companies seeking to hire from the same pool of potential employees. In addition, DOJ announced that it would pursue such actions criminally.

Since issuing the Human Resource Guidelines, DOJ has filed statements of interest in private no poach lawsuits and stated that it had several criminal investigations into wage fixing and no poach agreements ongoing but had not brought any indictments. Now that DOJ has brought two HR related indictments in the past month, companies should be on notice for such conduct. In fact, Assistant Attorney General Makan Delrahim stated “[t]he charges demonstrate the Antitrust Division’s continued commitment to criminally prosecute collusion in America’s labor markets.”

TAKEAWAYS
  • This is the second indictment brought by the DOJ involving wage fixing and no poach agreements in the past month. Following these indictments, companies and HR employees should beware of the increased potential for future criminal investigations and potential charges for such conduct.
  • The DOJ’s action also serves as an important reminder for companies to ensure that their antitrust compliance programs are current, comprehensive, and effective, and that employees responsible for HR activities are appropriately trained on the antitrust risks associated with HR 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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