No Poaching Agreements with Competitors Deemed Anticompetitive

Posted by Benjamin I. Fink on

The Federal Trade Commission and the Justice Department’s Antitrust Division recently issued guidance for companies with respect to wage fixing and no poaching agreements. According to the federal government, workers are entitled to the benefits of a competitive market for their services.  Workers are harmed if companies that would ordinarily compete against each other to recruit and retain employees agree to fix wages or other terms of employment or enter into “no poaching agreements” by agreeing not to recruit each other’s employees.

According to the Department of Justice, it intends to criminally investigate no poaching or wage fixing agreements that are unrelated or unnecessary to a larger, legitimate collaboration between the employers.  According to the government, these types of agreements eliminate competition in the same way as agreements to fix the prices of goods or allocate customers which have traditionally been criminally investigated and prosecuted as antitrust violations.  Agreements that do not constitute criminal violations could still lead to civil liability.

Companies considering engaging in agreements with competitors regarding the hiring or recruiting of employees need to be aware of this development.  The Antitrust Guidance for Human Resource Professionals published by the Department of Justice and the Federal Trade Commission can be found here.