The U.S. Department of Justice Antitrust Division (DOJ) and Federal Trade Commission (FTC) recently released Antitrust Guidance for Human Resource Professionals (the “Guidelines”), outlining how agreements with competing employers related to the terms of employment can result in antitrust violations. The Guidelines set forth the agencies’ long-standing enforcement position that agreements among competitors on levels of compensation or other benefits, as well as agreements to refrain from soliciting or hiring each other’s employees (“no-poach” agreements) that are not tied to legitimate collaboration, constitute per se (automatic) violations of U.S. antitrust laws.
The Guidelines also note that even without express or oral agreements, the mere discussion of competitively sensitive information—like current wages—leaves individuals and companies vulnerable to antitrust liability if the exchange of information is shown to have, or likely have, an anticompetitive effect. To avoid antitrust liability in connection with information exchanges or benchmarking, the Guidelines recommend: utilizing a neutral third-party to manage the exchange; exchanging non-current information; reporting the information in an aggregated format that does not identify participants; and involving enough participants so that the reported data cannot be linked to any individual participant.
While the Guidelines do not reveal any new legal positions, they are nonetheless significant for two reasons. First, the agencies make clear that going forward, the agencies may press criminal charges against individuals and companies conspiring with respect to employee compensation or benefits or entering into illegal no-poach agreements. Previously, the agencies have generally brought civil charges against companies engaging in these types of activities.
Second, the Guidelines make clear that the definition of “competitors” in the context of hiring and compensating employees is far broader than simply other companies in the same industry. Thus, companies in completely different industries may risk civil and criminal antitrust liability if they engage in per se illegal agreements with other companies that compete for the same types of employees.
These Guidelines are drafted specifically for human resources professionals. Along with the formal Guidelines, the agencies have provided an informative Q&A on how these violations may arise in the HR profession and a Quick Reference Guide with a list of “Antitrust Red Flags for Employment Practices.”