Federal Antitrust Enforcers Announce Intent to Crack Down on HR Practices That Can Be Illegal
The Federal Trade Commission and Department of Justice recently issued Guidance for Human Resources Professionals and others involved in hiring, compensation, and benefits decisions. The guidelines put companies and individuals on notice that the antitrust enforcers intend to investigate and seek criminal and/or civil sanctions for violations of the antitrust laws in connection with human resources practices.
The guidelines focus on the following categories of conduct that run afoul of the antitrust laws: (1) no-poaching agreements; (2) agreements to fix compensation and/or benefits; and (3) disclosures of non-public compensation or benefits information between companies competing for employees. The guidelines point out that companies may compete for employees regardless of whether they compete in their provision of products or services.
The guidelines do not mark a change or clarification of the law. Rather, they underscore generally recognized antitrust principles as applied to hiring and compensation decisions. After such a clear signal of enforcement policy from the federal authorities, the guidelines should be required reading for all HR professionals, executives and managers involved in hiring and compensation, and others with a meaningful role in compensation, hiring, and benefits. At a minimum, companies should distribute to all HR managers the quick reference card included with the more detailed guidelines.
The quick reference card states that antitrust concerns may arise if individuals or companies:
- Agree with another company about employee salary or other terms of compensation, either at a specific level or within a range.
- Agree with another company to refuse to solicit or hire that other company’s employees.
- Agree with another company about employee benefits.
- Agree with another company on other terms of employment.
- Express to competitors that you should not compete too aggressively for employees.
- Exchange company-specific information about employee compensation or terms of employment with another company.
- Participate in a meeting, such as a trade association meeting, where the above topics are discussed.
- Discuss the above topics with colleagues at other companies, including during social events or in other non-professional settings.
- Receive documents that contain another company’s internal data about employee compensation.
The more detailed guidelines include specific examples of conduct that is illegal under the antitrust laws. These examples indicate that the enforcers plan to police more than naked wage fixing. For instance, one of the examples indicates that it would be illegal to ask other companies competing for employees to stop offering certain benefits. Another example indicates that agreements to cap raises at a certain percentage are illegal, even if not tethered to a specific compensation amount.
The guidelines should be a helpful resource for HR managers and others involved in hiring, compensation, and benefits decisions vis-à-vis other employers. Individuals and companies should be mindful of these guidelines when participating in conferences, recruiting activities, or social events involving HR professionals from other companies. While the guidelines are directed to HR personnel, these issues can arise when other corporate officers or managers engage with other businesses regarding human resource policies and practices. For instance, private litigation by former employees of Apple, Google, and Adobe challenged an alleged no poaching agreement made by Steve Jobs and executives at Google and Adobe. The case settled for $415 million.
In light of this warning from the antitrust enforcers, companies should consider conducting an internal, confidential, and privileged self-assessment of their human resources practices under the auspices of in-house or outside counsel with antitrust expertise.