No poaching agreements are arrangements between employers where the parties agree they will not hire one another’s workers. They are also illegal. Last week a healthcare staffing company entered a plea deal with the Department of Justice that held them criminally liable for having a deal in place with an un-named competitor to not raise wages of nurses working in a county school district and to not hire nurses from one another.
The Department of Justice (DOJ) brought a labor-side antitrust case against a company called VDA OC LLC and one of its managers. Unlike many previous antitrust cases this was prosecuted criminally. Cases previously pursued were civil prosecutions and would not have involved prison time for individuals found guilty.
The no poach agreement was in place just nine months. An employee of VDA made just a single phone call and sent a single email to its competitor making the no poach compact. But that was all it took for the DOJ that had been looking to successfully pursue an antitrust case of this nature. The DOJ pursued the criminal case but ended up settling with the company and its former regional manager that had made the no poach agreement when they agreed to plea guilty. The guilty plea states that the conspiracy “occurred withing the flow of interstate commerce.” If affected nurses with wages totaling $218,000.
As a result of the case and guilty plea, VDA was penalized $134,000 in fines and restitution. The regional manager is still in court requesting his case be dismissed due to allegations of prosecutorial misconduct during the DOJ’s investigation.
This is the first antitrust no poaching case the DOJ has won. Previously the DOJ had lost two cases brought under civil law. In those cases, the defendants were acquitted by a jury.
Employers are advised to never attempt to restrict workers’ wages or ability to seek employment with another employer by way of an agreement not to hire between two or more other businesses. And of course, fixing wages in an industry is a major no-no. This would be illegal under the Sherman Act.
The genesis of this more recent application of antitrust law arose in October of 2016 when the Federal Trade Commission (FTD) and the DOJ Antitrust Division issued joint guidance for persons involved in hiring and compensation stating that fixing of wages and entering into no poaching agreements are anti-competitive and would be looked upon the same way as agreements to fix prices of goods or allocate customers. Think “hard-core cartel conduct.”
Antitrust laws also apply to businesses that share information about compensation with competing employers either directly or through third parties. This is why ASE follows stringent rules around its gathering of data and its publication of compensation and benefits surveys.
No poaching agreements are different from non-compete and non-solicitation agreements that are between an employer and their employee. No competition and no solicitation agreements are legal and enforceable if the terms preventing an employee from working for a competitor or for soliciting employees away from an employer are deemed reasonable.
Source: Law 260 Employment Authority. DOJ Gets 1st “No Poach” Guilty Plea With School Nurse Case (10/27/2022) USA v. Hee et. al. CCH HR Answers Now. Application of Antitrust Laws to Compensation and Hiring.