U.S. Federal Trade Commission Building.
U.S. Federal Trade Commission Building. (Photo: Diego M. Radzinschi/ALM)

The Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice have issued guidance signaling their interest in further cracking down on companies that make agreements with others that have the effect of limiting employees’ mobility or keeping their wages down.

The guidance issued by the agencies earlier this month to human resource professionals and others involved with hiring and compensation clarifies that so-called no-poaching and wage-fixing agreements between employers are violations of antitrust law, potentially punishable with criminal charges.

“These types of agreements eliminate competition in the same irredeemable way as agreements to fix product prices or allocate consumers, which have traditionally been criminally investigated and prosecuted as hard-core cartel conduct,” the guidance said.

But Anthony Haller, a partner at Blank Rome in Philadelphia, who represents employers in employment cases, noted that the guidance seems to go against pro-pay transparency moves from the Obama administration, such as a pay transparency executive order and the National Labor Relations Board’s continued efforts to protect employee rights to discuss pay.

The Justice Department, which along with the FTC declined to comment on the guidance, already has taken companies, like Apple Inc., eBay Inc. and Google Inc. to task in civil actions for antitrust violations they allegedly committed by making pacts that limited employees’ abilities to find new jobs in the technology field.

The new guidance states the agencies’ intentions to seek enforcement against individuals or companies that form oral or written agreements to ban soliciting or hiring each other’s employees in a no-poaching arrangement, or set uniform salaries across a set of companies through a wage-fixing agreement to keep employees from leaving a company for a better-paying job at a competitor.

The Justice Department and commission also warned in the guidance that even without an explicit agreement to fix compensation, exchanging information about it with other companies could be evidence of an “implicit illegal agreement.” In an industry or area with relatively few employers, the guidance explained, shared compensation data could hurt competition by allowing companies to set lower wages.

The agency guidelines come in the wake of some major antitrust hiring cases.

In 2010, the Justice Department alleged that Apple, Google and four other tech companies violated the Sherman Act by agreeing not to cold-call each other’s employees to offer them jobs. The case was settled in 2011, but the investigation of misconduct led to a major class action lawsuit brought by employees of the tech companies in California federal court, which settled in 2015 for a hefty $415 million.

There are some exceptions where information sharing about employee wages could be lawful, though, such as when information is aggregated so that it can’t be linked to an individual company, or when the information is relatively old, according to the guidance. If the data is used during an M&A deal or joint venture, it might be shareable under antitrust law as well.

Peter Altieri, a partner at Epstein Becker & Green in New York, who represents companies in antitrust and employment matters, said that companies should integrate this guidance into their practices.

“It should be included in HR compliance and training and risk training,” he said. “And even an amendment to the code of conduct for some companies would make sense.”

Haller said that “in some ways the government is really pushing for more transparency, but in this [antitrust guidance] they are saying if you discuss this outside the four corners of your own company, particularly with a competitor, then there’s risk,” he said. “I find that a little bit ironic.”

Contact the reporter Rebekah Mintzer @ rmintzer@alm.com Twitter: @rmintzer

The Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice have issued guidance signaling their interest in further cracking down on companies that make agreements with others that have the effect of limiting employees’ mobility or keeping their wages down.

The guidance issued by the agencies earlier this month to human resource professionals and others involved with hiring and compensation clarifies that so-called no-poaching and wage-fixing agreements between employers are violations of antitrust law, potentially punishable with criminal charges.

“These types of agreements eliminate competition in the same irredeemable way as agreements to fix product prices or allocate consumers, which have traditionally been criminally investigated and prosecuted as hard-core cartel conduct,” the guidance said.

But Anthony Haller, a partner at Blank Rome in Philadelphia, who represents employers in employment cases, noted that the guidance seems to go against pro-pay transparency moves from the Obama administration, such as a pay transparency executive order and the National Labor Relations Board’s continued efforts to protect employee rights to discuss pay.

The Justice Department, which along with the FTC declined to comment on the guidance, already has taken companies, like Apple Inc. , eBay Inc. and Google Inc. to task in civil actions for antitrust violations they allegedly committed by making pacts that limited employees’ abilities to find new jobs in the technology field.

The new guidance states the agencies’ intentions to seek enforcement against individuals or companies that form oral or written agreements to ban soliciting or hiring each other’s employees in a no-poaching arrangement, or set uniform salaries across a set of companies through a wage-fixing agreement to keep employees from leaving a company for a better-paying job at a competitor.

The Justice Department and commission also warned in the guidance that even without an explicit agreement to fix compensation, exchanging information about it with other companies could be evidence of an “implicit illegal agreement.” In an industry or area with relatively few employers, the guidance explained, shared compensation data could hurt competition by allowing companies to set lower wages.

The agency guidelines come in the wake of some major antitrust hiring cases.

In 2010, the Justice Department alleged that Apple , Google and four other tech companies violated the Sherman Act by agreeing not to cold-call each other’s employees to offer them jobs. The case was settled in 2011, but the investigation of misconduct led to a major class action lawsuit brought by employees of the tech companies in California federal court, which settled in 2015 for a hefty $415 million.

There are some exceptions where information sharing about employee wages could be lawful, though, such as when information is aggregated so that it can’t be linked to an individual company, or when the information is relatively old, according to the guidance. If the data is used during an M&A deal or joint venture, it might be shareable under antitrust law as well.

Peter Altieri, a partner at Epstein Becker & Green in New York , who represents companies in antitrust and employment matters, said that companies should integrate this guidance into their practices.

“It should be included in HR compliance and training and risk training,” he said. “And even an amendment to the code of conduct for some companies would make sense.”

Haller said that “in some ways the government is really pushing for more transparency, but in this [antitrust guidance] they are saying if you discuss this outside the four corners of your own company, particularly with a competitor, then there’s risk,” he said. “I find that a little bit ironic.”

Contact the reporter Rebekah Mintzer @ rmintzer@alm.com Twitter: @rmintzer