Last week the U.S. Department of Justice announced it is indicting a medical center operator for colluding with some of its competitors to not recruit one another’s senior-level employees. This indictment is the latest move against this employment practice that the government has focused more upon since 2016. That is when both the Federal Trade Commission and the Department of Justice Antitrust Division issued a joint guidance notice telling HR professionals and the employment world that setting up agreements not to recruit each other’s employees is a violation of antitrust laws. The temptation to engage in this type of practice during these times of exceptionally tight labor markets is very high.
This type of antitrust behavior results in lowering wages just as price fixing of goods or allocation of customers does to the marketplace. Other anti-trust behavior involves sharing of compensation data among competitors either directly or through a third-party. To avoid this issue with ASE surveys, we follow antitrust avoidance practices and never present data that is aggregated (by data line item) with less than five different organizations whose identities are kept anonymous. Further, data is not released less than three months after collection to allow the market to move beyond current wage and salary levels. ASE also controls for data dominance which is not publishing aggregated data where one organization’s data comprises over 25% of the reported data for that position.
In addition to making agreements with other companies about wages, salaries, and not recruiting from one another, the 2016 Department of Justice list of anti-trust “red flags” also includes warnings against:
Agreeing with another company about employee benefits;
Agreeing with another company about other terms of employment;
Even expressing to competitors that together you agree to not compete too aggressively for employees;
Exchanging company-specific information about employee compensation or terms of employment. Only participate in surveys when you know the third party follows antitrust avoidance practices;
Participate in a meeting where the above topics are discussed;
Discuss the above topics with colleagues at other companies including during social events or in other non-professional settings;
Receive documents that contain other company’s internal compensation data.
Back to the no poaching side of antitrust. The Biden Administration has emphasized its focus on enforcing the no poaching side of antitrust by not only bringing criminal prosecution against those organizations found to be colluding this way but also, by way of Executive Order, will be scrutinizing industry mergers that they see as resulting in higher prices and lower job options for workers. The Executive Order,, published July 9, 2021 targets non-compete agreements as another area employers have abused and will more and more find themselves in legal trouble when used. As some may recall, fairly recently a sub fast food shop got called out for actually having their sandwich makers sign a non-compete agreement as part of their employment. Really!! Sandwich makers!
HR professionals and the employers they work for should not only be aware of what the antitrust laws are but also in what forms these practices take the shape of to avoid getting caught up in this type of enforcement net. The Department of Justice and the Federal Trade Commission are encouraging HR professionals to report suspected activity to either the Department of Justices’ Citizen Complaint Center or the Federal Trade Commissions Bureau of Competition’s Office of Policy and Coordination.
Sources: Antitrust Red Flags for Employment Practices and Application of Antitrust Law to Compensation and Hiring; CCH HR Answers Now; Sweeping Biden Order Aims to Attack Lack of Competition and DaVita Indictment, Biden Order Ramp Up No-Poach Pressure LAW 360 (7/9/2021) and (7/19/2021)