Antitrust Division Signals Criminal Cases on No Poach Agreements Among Employers
January 24, 2018
The DOJ Antitrust Division signaled forthcoming criminal cases on no-poach agreements among employers. The news puts employers on notice and continues a policy announced during the Obama administration.
Speaking at a conference last Friday, Assistant Attorney General for Antitrust Makan Delrahim said, “In the coming couple of months you will see some announcements, and to be honest with you, I’ve been shocked about how many of these there are, but they’re real.” The comments signal a DOJ renewed focus on agreements between companies not to poach one another’s employees, and signal stiff treatment by the agency.
The DOJ issued joint guidance together with the Federal Trade Commission in October 2016 warning that naked no-poach agreements would be treated as price fixing. No-poach agreements are termed “naked” where they are not reasonably necessary to a larger, legitimate collaboration between the parties. No-poach agreements can cover agreements not to recruit one another’s employees or not to compete on terms of compensation (wage fixing).
Previous cases brought by the DOJ include the no-poach cases in the technology sector and in temporary nursing in an Arizona hospital; both were civil enforcement cases. FTC enforcement actions, in nursing services and in compensation for fashion models, date back to the 1990s. The FTC brings only civil enforcements actions and refers potentially criminal activity to the DOJ. The DOJ treatment of naked no-poach agreements as criminal under the Trump Administration was initially previewed late last year. The recent comments by the AAG are believed to be his first statement on the matter following his confirmation by the Senate.
An agreement between employers not to recruit each other’s talent or to set terms of compensation both employers will observe do not have to be formal to be illegal. As with other criminal antitrust violations, civil “follow-on” liability can also attach to the prohibited conduct, bringing with it potentially protracted litigation.
Human resources professionals and in-house counsel are reminded to contact outside antitrust counsel if they have questions about what conduct is permissible. The team at Paul Hastings stands ready to assist with its dedicated experience analyzing and defending policies related to employee mobility, offering market leading practices in both employment and antitrust. The DOJ is on the hunt for agreements not to compete for employees, including around compensation terms and recruiting.