On December 10, 2020, the Department of Justice (DOJ) announced that a grand jury had indicted the former owner of a therapist staffing company in Texas for a Sherman Act §1 violation. The indictment alleges that Mr. Jindal, and an employee acting at his direction, approached competitors about agreeing to lower wages for physical therapists, whom Mr. Jindal’s company hired to provide healthcare services to patients at home and in assisted living facilities. The indictment further charges Mr. Jindal with “Obstruction of Proceedings Before the Federal Trade Commission” for “ma[king] false and misleading statements to the FTC and with[holding] and conceal[ing] information from the FTC.” During the FTC investigation, which settled in 2018 with a consent decree, Mr. Jindal purportedly told investigators that his company’s wage cuts were unilateral and that he did not solicit an agreement with competitors. According to the indictment, he also falsely testified in an agency hearing that he did not text competitors to lower wages, never heard from rivals about their pay rates and did not know how much rivals paid their employees.

If convicted of the Sherman Act offense, Mr. Jindal could face 10 years’ incarceration and $1 million in fines, which could be increased to either twice the illegal gain or twice the loss suffered by victims.

The indictment follows the DOJ and FTC’s 2016 “Joint Guidance for Human Resource Professionals.” That guidance warned: “Going forward, the DOJ intends to proceed criminally against naked wage-fixing or no-poaching agreements.” Assistant Attorney General Makan Delrahim has repeatedly warned that the Antitrust Division gives “high priority” to no-poach violations and continues to investigate them. While the DOJ has yet to pursue criminal charges for a no-poach violation, it did in April enter into a deferred-prosecution agreement with Florida Cancer Specialists & Research Institute LLC, which included allegations of employee “non-solicitation provisions” between oncology service providers.

There are three key takeaways from the Jindal indictment:

  1. The DOJ was strategic in announcing a wage-fixing case as its first criminal labor-market prosecution: The Jindal conspiracy is more akin to a traditional price-fixing conspiracy because its explicit object was to directly set the rate of employee compensation. No-poach agreements, by contrast, threaten to suppress wages indirectly by reducing employer competition for employees. Yet, the indictment underscores the DOJ’s continued interest in criminalizing conspiracies that target worker compensation. Since the DOJ’s 2016 criminal no-poach warning, there have, conspicuously, been no criminal indictments. That delay is partly due to “prosecutorial discretion.” As Mr. Delrahim has said, the DOJ will only pursue no-poach agreements criminally if they “post-date [the DOJ’s] October 2016 guidance.” The clear allegations of intent in the Jindal indictment suggest the DOJ may view it as a test case for seeking criminal remedies for labor-market antitrust violations, including no-poach agreements (as well as a warning to bolster deterrence). Under the antitrust laws, criminal liability requires general intent to raise or lower prices; a defendant does not have to know he/she is doing something illegal. The Jindal allegations suggest the DOJ has considerable evidence of Mr. Jindal’s invitations to collude, and the alleged false statements to the FTC indicate he knew he was violating the law.
  2. The DOJ continues to emphasize individual accountability: Under the antitrust laws, both corporations and individuals can be indicted for criminal violations. For some time, the DOJ has considered individual accountability to be a pillar of antitrust enforcement and deterrence. In a 2015 memorandum called “Individual Accountability for Corporate Wrongdoing,” former U.S. Deputy Attorney General Sally Yates wrote: “One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing. Such accountability is important for several reasons: it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.” The Jindal indictment shows the DOJ intends to follow through on its commitment to individual accountability.
  3. The DOJ’s focus on labor markets is here to stay: Even with changing administrations, the DOJ will likely remain focused on labor-market competition, seeking criminal penalties where appropriate. Mr. Biden played a leading role in President Obama’s efforts to rein in non-compete and no-poach agreements. In October 2016, the Obama administration issued a “State Call to Action on Non-Compete Agreements” and a press release criticizing employee no-poach agreements as a primary reason for wage stagnation. These initiatives corresponded with the DOJ and FTC’s issuance that same month of their Joint Guidance for Human Resource Professionals, warning that naked no-poach agreements would be prosecuted as criminal antitrust violations. Recent statements from the Biden campaign suggest a continuation of Obama administration policy. In 2020, Mr. Biden tweeted: “It’s simple: companies should have to compete for workers just like they compete for customers. We should get rid of non-compete clauses and no-poaching agreements that do nothing but suppress wages.” His campaign website states that he “will work with Congress” to “outright ban all no-poaching agreements.”

As the DOJ continues to investigate naked no-poach agreements, it will be interesting to see if the Biden DOJ relies on similar allegations of obstruction and concealment to bolster its case before a trial jury. Stay tuned.