Wage Fixing Indictments Show Dangers of Discussing Labor Issues With Competitors

Parker Poe Adams & Bernstein LLP

Parker Poe Adams & Bernstein LLP

Last week, a federal grand jury returned an indictment against a Nevada temporary staffing agency and manager who allegedly conspired with a competitor to fix wages for temporary nurses assigned to a public school district. The indictment claims that the competitors agreed not to hire each other’s nurses and to limit wages offered to temporary nursing personnel. The Department of Justice brought criminal claims under the Sherman Act, which could result in penalties as high as 10 years in prison and $1 million for individuals and up to $100 million against corporations found to have violated the law.

In a second indictment filed earlier this week, the DOJ accused an outpatient medical facility in Arizona of per se criminal Sherman Act violations. The indictment was based on an alleged agreement with two competitors not to hire senior-level executives from one another.

The indictments demonstrate the extreme consequences that can flow from attempts to limit wages or engage in “no poaching” agreements with competitors. Managers and owners convicted of criminal antitrust violations regularly serve significant prison sentences. he Biden administration’s Federal Trade Commission and Department of Justice’s Antitrust Division have already indicated their intent to vigorously prosecute companies and individuals found to have engaged in anticompetitive practices that have the effect of depressing employee wages.

Employers should train managers with respect to antitrust compliance responsibilities. This training should include strict policies with regard to discussion of any business matters with actual or potential competitors. This training should make clear the personal risks that managers face who violate these requirements.

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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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