DOJ/FTC Publication Empowers Workers by Taking Aim at No-Poaching Agreements

October 28, 2016

In apparent support of U.S. workers and economic realities, the Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently issued guidelines for human resources professionals regarding anti-competitive hiring practices.

Citing the advantages of competition to our economy, the guidance demonstrates the agencies’ view that “firms that compete to hire or retain employees are competitors in the employment marketplace, regardless of whether the firms make the same products or compete to provide the same services,” and that express or implicit agreements between companies to not compete for workers, even if driven by cost-reduction objectives, violate federal antitrust laws.

The joint DOJ/FTC guidance references an array of industries in which no-poaching and non-solicitation arrangements between employers are prevalent, including health care, technology, and fashion and design. It also offers specific examples of how HR professionals and business leaders who dictate or influence hiring policies might engage in anti-competitive practices – practices that many employees may not even be aware of – including:

  • Entering into verbal or written agreements with a competitor to not hire or solicit each other’s employees
  • Exchanging internal documents and company-specific compensation information with an other company
  • Suggesting that employers not compete aggressively for employees
  • Setting pay scales or terms of employment for similar positions across a group of companies
  • Implementing caps on wage growth rates within companies in a particular industry or geography
  • Requesting the competitors agree to limit or discontinue employee benefits and other forms of compensation
  • Discussing anti-competitive employment practices privately with an other employer, in industry or trade group meetings, or in social settings and non-professional events
  • Conducting a survey (by a company, trade group, or professional society) of employers within an industry about current and future wages

Although the guidance indicated that “no-poaching agreements among employers, whether entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws…” it offers an exception for “legitimate collaborations between employers” such as qualifying joint ventures, shared facilities agreements, and other arrangements.

The DOJ/FTC announcement is an other substantial step forward to protect workers who may be looking for career growth within a particular industry, but who may not be aware of wage-fixing or no-poaching agreements that can limit job mobility. In response to the fact that 20 percent of the nation’s workforce is subject to non-compete agreements, including 14% of workers making less than $40,000 per year, this week the White House urged U.S. states to prohibit certain non-compete agreements and prevent employers from enforcing such agreements after layoffs.

Outten & Golden is dedicated to protecting employees and pursuing their rights in the workplace, and our attorneys have deep experience in matters involving employment contracts, non-compete agreements, executive compensation, employee benefits, and bonuses. If you suspect that your employer has engaged in anti-competitive or no-poaching employment practices, please contact us to discuss your situation.