In January the U.S. Department of Justice (DOJ) announced it would pursue anti-poaching agreements as a violation of antitrust law.  The Assistant Attorney General for the Antitrust Division made it official last week by issuing an announcement about its case against several companies in violation of the law.  The DOJ announced it had filed a complaint against Knorr-Bremse AG, Westinghouse Air Brake Technologies Corporation, and Faiveley Transport for conspiring to not compete for each other’s employees.  This is called a “no poach agreement.”

As detailed in an earlier EPTW the use of “Naked” no poach agreements that prevent employer’s hiring of each other’s employees is a real problem for the government. “Naked” agreements are any standalone agreement not to hire. However, employers may agree to not hire if the employers do it to further the interests of a legitimate collaboration such as the sale of a business unit. The legal “Clothed” agreements set a short time period during and shortly after the sale of a business unit where a no-poaching policy would be in effect. In the case of AT&T Corporation’s sale of one of its units, it agreed to refrain from hiring the employees of the sold company for eight months. The Third Circuit Court of Appeals looking at that case found the no poaching agreement was acceptable because it used “legitimate ancillary restraint and that its purpose was to ensure that the purchaser could retain the skilled services” of the previous owner’s employees.

Employers and management need to understand that just as with the discussion of pricing among competitors is a potential breach of the law, so to is the discussion of wages, salaries, and hiring restrictions deemed potential antitrust infraction. Non-compete agreements appear comparable to no poaching agreements, although they are different from a legal standpoint as far as the DOJ is concerned.

These are not just civil litigation issues. When a no poaching agreement is pursued by the DOJ it can be a criminal prosecution.

Employers are advised to take the following actions in order to avoid antitrust violation:

• Conduct an internal investigation to survey if the employer is collecting wage, salary, or benefit information. This is not to be confused with participating in a survey conducted by an outside neutral organization.  The investigation should be reviewing for agreements that include no poaching language.

• Implement policies for management and human resources prohibiting agreements to exchange wage, salary, or benefits information with another unrelated employer. Be sure management involved with these programs and agreements are trained and periodically asked to sign off that they will not engage in such practices. (Similar to conflict of interest agreements.)

• When participating in wage, salary, and benefit surveys make sure the surveys are complying with the DOJ Antitrust guidelines. ASE Surveys comply with DOJ guidance because ASE collects data from multiple industries, ages the data pursuant to the antitrust guidelines, and will only publish data in aggregated form and when a sufficient number of data points are present. All wage, salary, and benefit surveys the company participates in should be reviewed for compliance with Antitrust.

• And most obviously, do not enter into any no-poaching agreements unless they are part of an agreement that is for legitimate business reasons. These days such agreements should always have legal review.

The DOJ’s no poaching prosecution announcement is just one of several expected to be released in short order meaning they have identified other employers engaging in illegal no poaching practices.

As with all legal, regulatory, and judicial developments, ASE will keep an eye on and report any changes requiring employers’ attention.

Source:  Seyfarth Shaw DOJ Announces First Of A Number Of Anticipated No-Poach Enforcement Actions – What Should Employers Do Now?  04/12/2018