US: DOJ and FTC issue antitrust guidance for employment agreements

The US Department of Justice and the Federal Trade Commission have jointly issued new antitrust guidelines for human resources professionals. The agencies announced they intend to aggressively challenge, including through civil and criminal enforcement, certain types of agreements that limit competition in employment markets.

Specifically, the Justice Department is focusing on naked no-poaching or wage-fixing agreements. The government’s position is that, when these agreements are unrelated or unnecessary to a larger legitimate collaboration between employers, they eliminate competition in the same way as price-fixing agreements, which have traditionally been criminally investigated and prosecuted as cartel conduct. Further, the agencies emphasized that agreements and exchanges of information that do not constitute criminal violations may still lead to civil liability.

The federal antitrust agencies’ joint guidance provides that agreements among employers not to recruit certain employees or not to compete on terms of compensation are per se illegal. Accordingly, “[a]n HR professional should avoid entering into agreements regarding terms of employment with firms that compete to hire employees.” Importantly, “[e]ven if an individual does not agree orally or in writing to limit employee compensation or recruiting, other circumstances – such as evidence of discussions and parallel behavior – may lead to an inference that the individual has agreed to do so.”

Employers who observe such agreements or attempt to reach such agreements with another company regarding employment, compensation, or recruiting practices should contact antitrust counsel immediately to avoid or limit the potential civil and criminal liability.

Full Content: JD SUPRA Business Advisor

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