Have you been trying to switch jobs but for an inexplicable reason can’t seem to gain traction? If you suspect that your current employer may have some sort of arrangement with your prospective future employer, the law is on your side.
What are “no-poach” agreements?
“No-poach” understandings between businesses essentially declare a truce on hiring employees or executives from one another. They are more common than you might suppose, and they’re not limited to a specific industry. The government has started coming down harder on such practices — formal or otherwise — by applying antitrust laws to the employment marketplace.
In the past, the Department of Justice’s Antitrust Division has settled civil actions involving such big-name companies as Lucasfilm, Pixar, Adobe Systems, Apple, Google, Intel and Intuit.
But in October 2016, the Antitrust Division and the Federal Trade Commission released Antitrust Guidance for Human Resource Professionals, signaling a big shift in the handling of these cases. The government now pursues criminal —not just civil — prosecution of no-poach and wage-fixing agreements. And the DOJ and Federal Trade Commission still can pursue civil actions, as can an injured party, who could seek three times the damages actually suffered.
The latest lawsuit settlement announcement from the Antitrust Division involved two of the world’s largest rail equipment suppliers, which allegedly had used no-poach agreements for years. According to the April announcement, they allegedly agreed not to recruit or hire each other’s employees without prior approval. As part of the settlement, the companies won’t face further DOJ civil or criminal actions related to no-poach agreements.
But criminal enforcement may be accelerating. Early this year, the head of the DOJ’s Antitrust Division reportedly mentioned several active criminal investigations into no-poach agreements, saying announcements of criminal charges were coming soon.
Why are no-poach agreements a problem?
The government views such understandings, like price-fixing or allocating consumers, as a violation of the free and open markets that make for a vibrant economy. Competition among employers helps workers in the form of employment terms, and a competitive workforce can lead to better options for consumers.The violation requirements aren’t narrowly defined.
According to the late 2016 guidance: “An agreement among competing employers to limit or fix the terms of employment for potential hires may violate the antitrust laws if the agreement constrains individual [employer] decision-making with regard to wages, salaries, or benefits; terms of employment; or even job opportunities.”
And as far as the federal government is concerned, competing businesses are any companies pursuing the same employee pool, regardless of whether or not the businesses compete in the marketplace.
Keller Grover has extensive experience in antitrust litigation and employment violations. If you suspect you are falling victim to a no-poach agreement, contact us at 866-663-3308 for a free consultation.