The US Department of Justice and the Federal Trade Commission have jointly issued new antitrust guidelines for human resources professionals. The agencies announced they intend to aggressively challenge, including through civil and criminal enforcement, certain types of agreements that limit competition in employment markets.
Specifically, the Justice Department is focusing on naked no-poaching or wage-fixing agreements. The government's position is that, when these agreements are unrelated or unnecessary to a larger legitimate collaboration between employers, they eliminate competition in the same way as price-fixing agreements, which have traditionally been criminally investigated and prosecuted as cartel conduct. Further, the agencies emphasized that agreements and exchanges of information that do not constitute criminal violations may still lead to civil liability.
The federal antitrust agencies' joint guidance provides that agreements among employers not to recruit certain employees or not to compete on terms of compensation are per se illegal. Accordingly, "[a]n HR professional should avoid entering into agreements regarding terms of employment with firms that compete to hire employees." Importantly, "[e]ven if an individual does not agree orally or in writing to limit employee compensation or recruiting, other circumstances – such as evidence of discussions and parallel behavior – may lead to an inference that the individual has agreed to do so."
Employers who observe such agreements or attempt to reach such agreements with another company regarding employment, compensation, or recruiting practices should contact antitrust counsel immediately to avoid or limit the potential civil and criminal liability.
The joint guidance also reminds employers of the dangers of sharing competitively sensitive information with competitors, particularly in the context of analyzing a potential merger or acquisition. "While agreements to share information are not per se illegal and therefore not prosecuted criminally, they may be subject to civil antitrust liability when they have, or are likely to have, an anticompetitive effect," the guidance states. Accordingly, it is important for companies wishing to share employment information to consult with antitrust counsel. Such exchanges must be carefully structured to protect competition and maintain compliance with the antitrust laws and regulations.
Learn more about this development by contacting either of the authors or your DLA Piper lawyer.
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