No-Poach Guilty Plea Flags How to Mitigate Risks
On September 1, a healthcare staffing firm told a federal court in Nevada that it intends to plead guilty to antitrust violations. It was accused of conspiring with a competitor not to increase the wages of certain nurses or poaching or hiring nurses from each other.
This case demonstrates the growing enforcement of illegal labor market agreements by the Department of Justice.
Early identification of these types of agreements can provide options for employers, employees and their business partners and potentially reduce or eliminate criminal vulnerabilities.
Looking at the DOJ’s recent enforcement actions, there are some insights companies can use to mitigate antitrust risk.
Enforcement without poaching and wage determination
Criminal enforcement of labor market collusion laws has increased dramatically in recent years.
In 2016, the DOJ announced a policy change to prosecute employers and individuals who enter into unfunded wage-fixing or poaching agreements with other employers.
In 2021, President Joe Biden issued an executive order that encouraged the DOJ and the Federal Trade Commission, among others, to expand and strengthen enforcement against “wage fixing” and other unlawful labor market agreements.
Since 2021, the DOJ has indicted several counts of labor market collusion. All of these cases survived motions to dismiss, but ultimately ended in acquittals until this most recent case, which marked the DOJ’s first-ever criminal job victory.
Early detection is vital
Finding potentially problematic labor market arrangements early gives employers more options and reduces vulnerability to fees.
Criminal violations of antitrust laws can have serious consequences, including fines and imprisonment. In addition, external business partners, such as B. Personnel placement, recruitment and organizational consulting firms may be involved.
Antitrust violations can be prevented by educating key employees – management, human resources and legal – and external business partners about specific issues that can create risks.
This includes knowing how to identify violations and how to achieve business goals without incurring potential antitrust liability. Legal and business risks are mitigated by creating and implementing internal antitrust compliance policies.
Even if a potentially unlawful labor market arrangement is discovered, a DOJ leniency program allows the first reporting company or person who admits participation in the unlawful arrangement and fully cooperates with the DOJ to avoid a criminal conviction and the resulting fines and imprisonment .
How to reduce antitrust risk
Ensure leadership awareness
Because criminal enforcement of unlawful labor agreements is still a relatively new development, many executives may not be aware that entering into an oral contract with a competing employer can result in massive criminal fines or even imprisonment.
Providing targeted, eye-catching, and easy-to-implement antitrust compliance advice to executives and everyone involved in hiring decisions is the most effective and cost-effective way to limit the risk of entering into an unlawful labor market agreement.
Train HR to spot red flags
As a rule, HR employees do not enter into unlawful labor market agreements themselves. More often, they receive information or instructions from other employees or business partners that indicate a possible agreement or understanding with another employer.
HR partners – internal HR staff and external partners – should be trained to spot potential red flags. This includes instructions not to recruit or hire from a particular company, making compensation decisions based on agreements with other employers, and sharing or receiving confidential compensation or hiring information about another company.
It may also be helpful to distribute the DOJ and FTC’s Red Flags for Employment Practices quick reference card to Human Resources.
Know what sensitive information can be shared
Sharing compensation and hiring information is not illegal, but must be done with caution.
It’s also helpful for HR professionals to attend conferences to learn industry best practices, and it may even be necessary to share this information, for example, when evaluating a merger, acquisition, or joint venture proposal.
Criminal prosecution for an antitrust violation of the labor market requires an agreement between two or more individuals or companies not to compete in recruiting or retaining employees.
But an agreement need not be formal or in writing to violate antitrust laws—an informal agreement or other understanding, implied or implied, relating to the compensation or hiring of employees is also prohibited.
While the DOJ’s indictment in the most recent case seems to indicate clear communication that reflects poaching and wage agreements, antitrust violations can be inferred from the exchange of information between companies.
Even if the disclosure of competition-relevant information – such. B. Compensation and benefits information or hiring strategies – may not alone warrant a criminal conviction, the possibility of a costly and disruptive criminal investigation or prosecution should give employers concern.
The exchange of competitively sensitive hiring or compensation information should be done in a manner that involves the advice of an antitrust attorney.
This article does not necessarily represent the opinion of the Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
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Information about the author
Lauren Norris Donahue is a partner in K&L Gates’ Chicago office, where she focuses on domestic and international internal investigations, corporate criminal defense, complex commercial litigation and antitrust advice. She is a member of the Antitrust, Competition and Trade Regulation and Investigations, Enforcement and White Collar practice groups.
Derek Sutton is an Associate in the firm’s Raleigh, NC office and a member of the Antitrust, Competition and Trade Regulation practice group.