Reed Smith Client Alerts

After years of warnings and recent trial losses, the antitrust agencies continue to aggressively pursue antitrust violations in labor markets. This alert provides a brief summary of the agencies’ undeterred efforts to date along with key takeaways for companies and their representatives to mitigate the risk of a criminal no-poach or wage fixing investigation or violation.

Human resources antitrust guidance

In 2016, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) (collectively herein, the antitrust agencies) issued joint guidance about potential violations of antitrust laws to human resource (HR) professionals and others involved in hiring and compensation decisions. In that guidance, the agencies warned that wage fixing and no-poach agreements are subject to criminal antitrust charges when competing employers make agreements that constrain or restrict potential hires’ wages, salaries, benefits, terms of employment, or other opportunities,1 laying the foundation for a more aggressive antitrust enforcement approach in labor markets. Mostly silence followed for years until late 2020, when DOJ brought its first criminal wage fixing case.2 DOJ quickly followed up with a number of other criminal no-poach actions against companies and their respective individual employees.

Trial losses

In April 2022, DOJ lost its first two wage fixing and no-poach cases. In Jindal, DOJ accused the former owner of a Texas health care staffing company and his clinical director of colluding with competitors to lower pay rates for physical therapists and physical therapist assistants. The defendants were ultimately acquitted at trial on the antitrust charges, although Jindal was found guilty of obstructing the underlying FTC investigation. In the second no-poach case, decided only a day after Jindal, a Colorado federal jury acquitted a health care company and its former CEO.3 These losses raised questions about the effectiveness of DOJ’s strategy and approach in criminally prosecuting wage fixing and no-poach cases, even under a per se theory of liability. Those losses, however, have not deterred DOJ.4