On Oct. 20, 2016, the United States Department of Justice, Antitrust Division and the Federal Trade Commission issued antitrust guides for human resource professionals. The guides are intended to alert human resource professionals and others involved in hiring and compensation decisions to potential violations of the antitrust laws. In connection with this guidance the Federal Enforcement Agencies issued the following “red flags for employment practices”:

  • agreeing with another company about one or more employees salaries or other terms of compensation;

  • agreeing with another company to refuse to solicit or hire another company’s employees;

  • agreeing with another company about employee benefits;

  • agreeing with another company on terms of employment;

  • discouraging competitors from competing too aggressively to recruit employees;

  • exchanging company-specific information about employee compensation or terms of employment with another company;

  • participating at a meeting such as a trade association, where the above topics are discussed;

  • discussing the above topics with colleagues at other companies, including during social events;

  • receiving documents that contain another company’s internal data about its employee compensation.

These guidelines and red flags were intended to be a warning to human resources professionals that “naked wage-fixing or no poach agreements among employees whether entered into directly or with their party intermediary are per se illegal under the antitrust laws.” As such, conduct in violation of the guidelines would evidence a knowing intention to violate the law, allowing the Department of Justice to pursue criminal sanctions against anyone who engages in such conduct. The need for these warnings arose out of three civil actions brought against various technology companies that entered into “no poach” agreements with competitors. In those cases many of the defendants argued that the agreements occurred in the context of joint ventures or other legitimate collaborative activity. As the government successfully noted in response, what began as legitimate collaborative activity “morphed” into companywide agreements not to hire or not to “cold call” each other’s employees under any circumstances.

These warnings and guidelines are particularly significant for professionals engaging in mergers and acquisitions. Even if participants in an information exchange are parties to a proposed merger acquisition, there is antitrust risk if the shared information is about terms and conditions of employment. In view of this guidance and red flags, parties engaging in merger discussions, drafting of letters of intent, or due diligence activities should use particular care in sharing information regarding employment data, as the government has explicitly warned that the sharing of information (particularly where it is not specifically limited to what is necessary to complete the merger and acquisition discussion or acquisition) may be subject to criminal prosecution.