Employers who enter into "no-poach" agreements with other companies, or who engage in wage-fixing agreements, could find themselves facing time in the slammer, if the Department of Justice has anything to say about it.
According to an HRDive report, the DOJ is reviewing such agreements and "has a handful of criminal cases in the works." At a conference in January, the report says, assistant attorney general for the DOJ antitrust division Makan Delrahim told attendees that the agency would be announcing indictments over no-poach agreements and "naked wage-fixing" agreements, with the actions to come over the next few months.
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Delrahim was said to have declared himself "shocked" at how many of these agreements exist. In no-poach agreements, companies agree not to recruit or hire each other's employees, while in naked wage-fixing agreements, they agree to restrict wages and benefits that are not tied to a legitimate collaboration or joint ventures between the companies involved.
The DOJ has taken the position that such agreements restrain competition for employees and could constitute per se, or automatic, violations of antitrust laws.
In late 2016, the DOJ and the Federal Trade Commission issued a guidance document for human resource professionals that affirmed the illegality of employer representatives agreeing to fix wages or to not hire one another's workers. The agencies also said at the time that they intended to pursue criminal charges against companies and individuals engaged in such agreements.
That means the guilty parties could face not just significant fines, but also jail time. Corporations found guilty of criminal violation of antitrust laws face fines of up to $100 million; individuals could get up to 10 years in prison, as well as fines of up to $1 million.
HR professionals in particular are in their crosshairs, since their very jobs put them in the best position to make sure a company is compliant with the law.
Prior to the guidance in 2016, enforcement on these issues was generally handled through civil proceedings brought by the DOJ and the FTC, even though it could have been treated as criminal liability. And while it was widely expected that the Trump administration wouldn't continue the policy shift from civil to criminal that began under former President Obama, that has not been the case, with the current administration's officials making it clear that criminal enforcement will continue to be a part of the approach.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
