Tuesday, November 29, 2016

Don’t Enter Into Hiring Agreements with Your Competitors

Many employers may be surprised to learn that it is illegal to enter into agreements with competitors regarding employee hiring. Federal antitrust law prohibits businesses who compete with each other to enter into agreements concerning employee wages, benefits, and many other terms of employment. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently released guidance for employers on these issues, which you can access by clicking here

The guidance discusses how agreements among employers not to recruit certain employees or not to compete with one another over employee wages are illegal. These agreements do not have to be official or in writing—informal, oral agreements are also illegal. They also do not even have to be between the two companies directly, as agreements brokered by a third party will also be illegal. The guidance notes that it is even illegal for employers to share information regarding employee wages or benefits with one another if this information is not available publicly. 

The guidance also states that “no-poaching” agreements are illegal. These are agreements between employers where they agree not to hire each other’s employees. The guidance notes that an agreement between tech companies not to cold call each other’s employees violated antitrust law and led to an FTC lawsuit. The guidance also notes that the DOJ will bring criminal charges against employers who enter into no-poaching agreements. A conviction for entering into a no-poaching agreement could result in a felony and up to 10 years in jail. 

It is important to remember that federal antitrust law makes it illegal for employers who may compete for employees to collaborate among one another over the amount they will pay those employees. This does not necessarily mean that they have to be in the same industry. For instance, a car company could not enter into an agreement with a company making microprocessors not to compete over wages if it is possible that a factory worker for the car company could also work in the factory of the company making microprocessors. 

Employers should remember that antitrust laws only prohibit them from coordinating with other employers. They do not prohibit employers from taking unilateral actions. It is perfectly legal for an employer to have a policy not to poach employers from competitors, or not to get into a bidding war with a competitor over an employee. It is only illegal for the employer to coordinate these policies with other employers.  

If you think you may have broken one of these antitrust laws, contact legal counsel immediately