Carl Hittinger and Tyson Herrold.
Human capital (i.e., skilled labor) has become increasingly vital to the success of business enterprises. But such invaluable capital can also be extremely difficult to attract and retain, as corporate loyalty has become less of a two-way street and the gold ring of opportunity swings by. Most companies have witnessed critical employees jump ship to join competitors or newly trained understudies put their expensive training to work for rivals who offer not only better and fairer financial rewards but often a more comfortable and civilized safe haven. Where permitted by state law, agreements between employers and employees can mitigate these inevitable disruptive and sometimes irreparably damaging contingencies. But some companies, finding such “vertical” noncompete agreements ineffective or inadequate, have resorted to “horizontal” arrangements with competitors to essentially hobble opportunistic employees. Aptly labeled no-poach and wage-fixing agreements, the most perilous of these agreements inhibit companies from recruiting or hiring employees from competitors or collectively set employee wages and terms of employment. Although tempting additions or alternatives to sometimes problematic noncompete agreements, these collusive arrangements may soon carry federal criminal penalties.
On Jan. 19, speaking at a conference hosted by the Antitrust Research Foundation, newly appointed assistant attorney general for the antitrust division Makan Delrahim declared that the U.S. Department of Justice (DOJ) will be pursuing criminal charges for no-poach and wage-fixing arrangements. Delrahim commented: “We have been very active in [investigating no-poach and wage-fixing agreements]. I think over the coming couple of months, you will see some announcements. And to be honest with you, I’ve been shocked how many of these there are. But they’re real. … We are treating those … in certain circumstances as criminal.” So how do the antitrust laws apply to these arrangements and what can human resource professionals expect?
