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FTC and DOJ Issue Antitrust Compliance Guidelines for HR Professionals
Practical Law Legal Update w-004-1019 (Approx. 5 pages)
FTC and DOJ Issue Antitrust Compliance Guidelines for HR Professionals
by Practical Law Antitrust
| Published on 24 Oct 2016 • USA (National/Federal) |
The Federal Trade Commission (FTC) and Department of Justice (DOJ) issued antitrust compliance guidance for human resources professionals who hire or set compensation for employees. The guidance discusses antitrust violations that may occur in the employment market and notes that the DOJ is prepared to criminally prosecute individuals and businesses for wage-fixing or no-poaching agreements.
On October 20, 2016, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) published guidelines for human resources professionals and others involved in the hiring and setting of compensation for employees. The agencies' Antitrust Guidance for Human Resource Professionals discusses the application of the antitrust laws to the employment marketplace. The guidelines point out that any firms that compete for employees are competitors in the employment market, even if those firms do not compete in the products and services that they offer.
The guidelines address possible sanctions for violations of the antitrust laws, which may include:
- Criminal prosecution by the DOJ.
- Civil enforcement actions by the FTC or DOJ.
- Private civil actions brought by employees who have been harmed by the activities.
Sanctions may arise out of the following antitrust violations:
- No-poaching (also known as non-solicitation) agreements.
- Wage-fixing agreements.
- Sharing of sensitive information.
The guidance arrives in the wake of several recent lawsuits alleging no-poaching agreements in the tech industry (see Practice Note, Non-Solicitation Agreements: In re High-Tech Employee Antitrust Litigation).
Per Se Violations of the Antitrust Laws
No-poaching and wage-fixing agreements are per se illegal under the antitrust laws. Unless an agreement is part of, and reasonably necessary to, a legitimate collaboration between employers, it is illegal without any further inquiry into the agreement's competitive effects. The new guidance clarifies that the DOJ is willing to criminally prosecute illegal agreements in the employment context.
No-poaching agreements are where competitors agree to:
- Refuse to solicit another company's employees.
- Refuse to hire another company's employees.
For more information on non-solicitation agreements, see Practice Note, Non-Solicitation Agreements.
Wage-fixing agreements are where competitors agree to:
- Set salaries at a certain level or within a certain range.
- Determine other terms of compensation at a specific level or within a certain range.
Sharing Information with Competitors
Sharing information with competitors can also give rise to civil antitrust liability, including information about the wages that companies pay their employees. Agreeing to share information is typically not a per se violation of the antitrust laws, but it can lead to liability when the exchange has, or is likely to have, an anticompetitive effect.
The guidelines state that in order to avoid liability for information exchanges, parties should consider:
- Exchanging information through a neutral third party.
- Only exchanging older information.
- Aggregating information to shield the identity of the underlying sources.
- Aggregating sources to avoid linking data to a particular source.
If individuals or companies are considering sharing information or collaborating with competitors and have questions about the legality of their actions, they may:
- Use the DOJ's business review process.
- Obtain an advisory opinion from the FTC.
For more information on information exchanges, see Practice Note, Information Exchanges with Competitors (Non-Merger). For additional information on requesting a DOJ or FTC review of planned information exchanges, see Practice Note, Seeking DOJ Business Review Letters and FTC Advisory Opinions.