DOJ Announces Intent to Go Criminal in Wage-Fixing and No-Poaching Antitrust Cases

swisherFeatured Expert Contributor — Antitrust & Competition, U.S. Department of Justice

Anthony W. Swisher, a Partner in the Washington, DC office of Squire Patton Boggs (US) LLP

In April of this year President Obama issued an executive order designed to “protect American consumers and workers and encourage competition in the U.S. economy … .” The order aimed to expand competition policy beyond just the Justice Department Antitrust Division (DOJ) and the Federal Trade Commission (FTC), and encouraged every federal agency to consider ways to enhance competition when drafting and enforcing each given agency’s regulations. A notable element of the President’s executive order was the promotion of competition in labor markets. The order asserted that the economic growth that flows from competitive markets “creates opportunity for American workers,” and that anticompetitive practices can reduce those opportunities.

Picking up on the themes originated in the executive order, the DOJ and FTC in October released “Antitrust Guidance for Human Resource Professionals” (Guidance). Directed to human resource professionals and others involved in recruiting and hiring employees, the Guidance provides tangible evidence of the administration’s focus on competition as it relates to employees and employment decisions. The Guidance was not issued in a vacuum, but follows (and cites) years of enforcement of employee-focused antitrust violations. The document cites, for example, three “no-poaching” cases brought by DOJ in recent years against Silicon Valley technology firms, alleging that those firms entered into agreements not to “cold-call” each other’s employees, as well as a civil action against a state hospital association alleging an agreement to fix the wages of temporary nurses. As the Guidance makes clear, the antitrust agencies have a long enforcement history in the employment context.

The agencies’ Guidance doesn’t just recite this history, it breaks major new ground. The most significant element of the Guidance, and the piece that has drawn the most attention, is DOJ’s unprecedented announcement that it will pursue criminal antitrust charges against individuals and companies alleged to have entered into wage-fixing or no-poaching agreements. Substantively, this is a major shift for DOJ. The agencies have challenged similar conduct in the past, but DOJ has never previously used its criminal authority in a case involving such claims. Going forward, however, DOJ may “bring criminal, felony charges against the culpable participants in the agreement.” Included in DOJ’s focus are agreements among firms regarding salary, benefit levels, or other elements of compensation, “either at a specific level or within a range.”

DOJ’s announcement of its intent to proceed criminally signals that new cases are likely coming. This type of announcement is not merely pro forma, but typically comes when DOJ believes it will face similar situations in the future. The Antitrust Division wants to ensure that criminal targets cannot claim that they were not on notice of the severity of the consequences of their alleged conduct. DOJ’s announcement means that the criminal section of the Antitrust Division is looking for cases, and companies have been put on notice.

As significant as the Guidance itself is, the larger policy implications are also intriguing. As noted, the Guidance did not come unheralded, but was preceded by the President’s executive order announcing a new focus on competition policy. Clues to DOJ’s heightened emphasis on employment also could be found in speeches by DOJ officials leading up to issuance of the Guidance. For example, in a recent speech the acting head of the Antitrust Division noted that DOJ merger review would include consideration of whether a merger would give the merged firm “power to depress wages or salaries.”

Moreover, immediately following the antitrust agencies’ issuance of the Guidance, the White House issued a Fact Sheet specifically focused on competition as it relates to employment. Titled “The Obama Administration Announces New Steps to Spur Competition in the Labor Market and Accelerate Wage Growth,” the Fact Sheet cites the antitrust agencies’ Guidance as just one among several competition policy initiatives aimed at labor and employment. The Fact Sheet also announced an Issue Brief by the Council of Economic Advisors on monopsony power as it relates to employment, and a set of “best practices” for state policymakers designed to reduce the prevalence of non-compete clauses in employment agreements. Taken together, these announcements reflect a remarkable emphasis on competition as it relates to employment. Given this executive branch focus, DOJ’s announcement of its intent to use its criminal authority in wage-fixing and no-poaching cases must be viewed as even more significant. This is not a policy shift solely by the Antitrust Division, but has the backing of an administration-wide effort.

With the outcome of the presidential election, an obvious question is whether the present administration’s focus on competition in employment will continue under the new administration as well. Unfortunately, it may be too early to tell. On the one hand, the new administration might be expected to revert to a more traditional antitrust enforcement program that focuses relatively less attention on employment related matters, and relatively more attention on consumers. On the other hand, President-elect Trump has already taken a vocal interest in antitrust matters in other contexts, and the focus on competition as it relates to labor and employment does fit with some of the themes of his campaign more generally. Moreover, criminal antitrust enforcement is an area that enjoys broad bipartisan support, and tends to stay relatively stable, or even expand, over time. For now, the safe assumption for companies trying to order their affairs in compliance with the law is that a focus on employment generally—and DOJ’s use of its criminal authority specifically—will continue for the foreseeable future.

One thought on “DOJ Announces Intent to Go Criminal in Wage-Fixing and No-Poaching Antitrust Cases

  1. Pingback: FEDERAL REGULATORY READING LIST: Resources for New Leaders at DOJ – The WLF Legal Pulse

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