As the White House comes under Republican control, expect significant rollbacks to recent initiatives at the National Labor Relations Board (NLRB), the Equal Employment Opportunity Commission (EEOC), and the U.S. Department of Labor (USDOL).
Brian Bouchard
One throughline between administrations, however, has been HR’s responsibility to manage antitrust issues, like wage fixing, non-poaching pacts and overly aggressive restrictive covenants.
Antitrust tends to play second fiddle to employment-oriented laws, like paid family leave or overtime. Perhaps this is why, in 2016, the Federal Trade Commission (FTC) and U.S. Department of Justice-Antitrust Division released “Antitrust Guidance for Human Resources Professionals” — a resource that called on HR to end antitrust abuses in the U.S.
The Trump administration left this guidance in place. Did you hear about it? If not, you’re in luck because the FTC and DOJ just released “Antitrust Guidelines for Business Activities Affecting Businesses” to replace the 2016 missive.
Our nation’s antitrust laws come as a trinity: the Sherman Act, the Clayton Act and the Federal Trade Commission Act. These laws safeguard free markets by promoting open and fair competition. This most obviously involves preventing monopolies, price fixing and other restraints on trade that unduly stifle competition for goods and services.
But these laws also protect competition for labor. In this context, government agencies focus on whether business policies, practices and agreements harm competition for workers. Importantly, these instruments do not have to be written down to violate antitrust laws. So-called handshake deals and gentleman’s agreements are enough to land any company in hot water.
Non-poaching pacts trigger significant antitrust concerns. Once rampant in the medical field, non-poaching pacts are agreements between businesses not to recruit, solicit, divert or hire each other’s workers. The legality of these pacts depends on the industry, the scope of the restraint and the businesses involved.
A non-poaching pact between competing businesses will almost always violate antitrust laws. Why? Because non-poaching agreements stifle employee mobility between competitors, stifling wage growth and harming businesses outside of the “pact.” By contrast, a non-poaching restriction for a consultant working with a business may pass antitrust muster if narrowly tailored to not be a naked restraint on trade.
According to the DOJ, HR professionals are often aware of these pacts or are at the forefront of creating them. Don’t assume that pacts materialize only in smoke-filled rooms. Often, they emerge from an innocent conversation between two HR professionals at a convention venting about hiring costs and casually agreeing not to solicit each other’s employees. An antitrust violation does not require anything more formal than that.
Wage-fixing agreements are never OK.
These agreements involve two companies setting wages, commissions or other benefits of employment such that employees cannot elevate their economic condition by moving to another company. Engaging in this practice can result in both civil and criminal consequences. Last year, the DOJ prosecuted four medical companies in Maine and their owners for allegedly agreeing to fix wages for workers in the area and for entering mutual nonpoaching pacts.
Sharing sensitive information with competitors about employment terms may also violate antitrust laws, but context is key.
Businesses that share information to “organically” align their compensation and restrain markets likely violate antitrust laws.
Whereas businesses that acquire information from a legitimate consultant or algorithmic platform (including AI) to benchmark wages are likely safe.
Non-competes are a perennial antitrust topic and will remain so until Congress enacts comprehensive legislation. Last year, the FTC promulgated new rules banning non-competes, but courts have stayed their implementation. Most recently, the FTC has required companies to waive noncompetes in settlement agreements or deferred prosecution agreements to correct for market restraints.
Federal agencies have also zeroed in on “stay or pay” agreements, which require a worker to pay a financial “fee” to leave a company, including repaying the cost of training, education, paid leave or other benefits. These agreements invite antitrust scrutiny when they prevent workers from working elsewhere or starting a business.
Given the continued focus on antitrust in the employment context, HR professionals must remain vigilant. Staying informed about evolving guidelines and legal interpretations is crucial. By proactively addressing these issues, HR can help protect their organizations from legal challenges and foster a fair and competitive labor market, regardless of the political climate.
