4 days earlier than President Trump took workplace, the Division of Justice (“DOJ”) and Federal Commerce Fee (“FTC”) (collectively, “the Companies”) below the Biden administration launched their “Antitrust Pointers for Enterprise Actions Affecting Employees” (“The Pointers”). These Pointers substitute and develop upon antitrust steering for HR professionals that the Obama administration issued in 2016. The brand new Pointers intention to make clear how the DOJ and FTC “determine and assess enterprise practices affecting staff that will violate the antitrust legal guidelines.”
Specifically, the brand new Pointers handle the next forms of agreements and enterprise practices as violations of antitrust legislation that will set off civil penalties or prison legal responsibility:
1. Wage-Fixing and No-Poach Agreements
Wage-Fixing Agreements: These are agreements between companies (or between people of various companies) to repair wages or different phrases of compensation, equivalent to advantages and bonuses. The Companies say these agreements could also be unlawful even when they solely set a variety, ceiling, or benchmark for calculating wages with out setting a particular wage.
No-Poach/No-Solicit Agreements: These are agreements between companies (or between people of various companies) to not recruit, solicit, or rent staff. This could embody an settlement to request permission from the opposite firm earlier than making an attempt to rent an worker. The Companies say an settlement could also be unlawful even when it doesn’t utterly prohibit hiring the opposite firm’s staff. For instance, an settlement to not “chilly name” staff is taken into account a no-poach settlement by the Companies no matter whether or not the companies are allowed to rent the employees who utilized for a place with out first being solicited.
Notably, the Companies proceed to determine no-poach and non-solicit agreements as doubtlessly per se prison violations of the antitrust legislation even after DOJ suffered a sequence of stinging losses in prison no-poach trials.[1]
2. No-Poach Agreements Between Franchisor and Franchisee
No-poach agreements within the franchise context happen when franchisors and franchisees conform to not compete for staff. The up to date Pointers develop on the no-poach agreements within the franchise context with the Companies stating they might be unlawful no matter whether or not they really hurt staff. The Companies be aware {that a} franchisor may violate antitrust legal guidelines if it organizes or enforces a no-poach settlement amongst franchisees that compete for staff. Written and/or unwritten agreements between franchisees to not poach, rent, or solicit one another’s staff can also violate state legal guidelines, in response to the Companies.
3. Sharing Competitively Delicate Info
In keeping with the Companies, sharing competitively delicate info together with your opponents, together with phrases and circumstances of employment or compensation, can also violate the antitrust legal guidelines if the data trade has (or is prone to have) anticompetitive impact. Discussing two sizzling areas of antitrust focus—info exchanges and algorithmic collusion—the Companies additionally state that info exchanges can function proof of a wage-fixing conspiracy, together with info exchanges facilitated via an algorithm or another third occasion, or may be illegal. The Companies go as far as to say that algorithms that generate wage suggestions could also be illegal even when companies don’t strictly adhere to these suggestions.
4. Non-Compete Clauses
The Pointers say that non-compete clauses that limit staff from switching jobs or beginning a competing enterprise can violate the antitrust legal guidelines. As we beforehand mentioned, the FTC issued a rule banning most non-compete agreements, however a federal choose in Texas struck down that rule in July 2024. The Pointers acknowledge that case, which is now on attraction, however reassert the FTC’s authority to handle non-competes on a “case-by-case” foundation.
5. Different Employment Situations
The Companies say they may also scrutinize any agreements that “impede employee mobility or in any other case undermine competitors.” The Pointers use the next as illustrative examples:
- Worker non-disclosure agreements
- Coaching reimbursement agreements
- Non-solicitation agreements with workers
- Exit price and liquidated damages agreements
- False earnings claims by employers
Lastly, the Pointers emphasize that antitrust legal guidelines that defend workers additionally apply to impartial contractors.
Will the Pointers Have Staying Energy within the new Administration?
Time will inform how the brand new Pointers fare below the Trump Administration. On one hand, two Republican FTC Commissioners dissented from issuing the Pointers—criticizing the timing “mere days earlier than” the transition of energy. Alternatively, the Obama administration’s 2016 pointers survived the primary Trump Administration. Earlier Trump-appointed leaders of the DOJ Antitrust Division doubled down on the Steerage’s warning and introduced the primary prison no-poach instances. The brand new Pointers have already lasted a busy three weeks for the reason that inauguration.
Given the continued antitrust deal with labor it stays clever for corporations to:
- Evaluate hiring and compensation practices that implicate the forms of actions the Pointers cowl—particularly practices involving no-poach agreements, non-competes, info sharing, or hiring restrictions.
- Evaluate kind or template agreements for workers and impartial contractors to make sure compliance with antitrust legal guidelines.
- Watch this area to remain up-to-date on the Trump administration’s method to antitrust steering and enforcement.
FOOTNOTES
[1] Ruling and Order on Defendants’ Motions for Judgment of Acquittal, United States v. Patel, No. 3:21- cr-220 (D. Conn. Apr. 28, 2023), ECF No. 599.