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July 2, 2018
This paid piece is sponsored by Woods, Fuller, Shultz and Smith PC.
Finding good talent is not an easy task for any employer. This problem is made worse in communities such as Sioux Falls, with low unemployment causing fewer people to look for new work. Once an employer successfully finds a quality employee, it’s understandable for the company to take measures to keep that employee. However, sometimes these measures create worse problems than they solve. If competitors agree to pay their respective employees the same wage or agree to not solicit workers from each other, they could run into serious federal antitrust concerns.
Federal antitrust law is intended to maintain competition in the marketplace. Since the passing of the Sherman Act in the late 19th century, federal antitrust law has largely pursued large companies agreeing to fix prices of goods to maximize profits and thus harm consumers. But price fixing is not limited to goods, as agreements between employers to fix the wages of their workers or agreements to not hire employees of other companies also violate the Sherman Act and can bring federal regulators down upon employers.
Efforts to penalize wage fixing have increased in the past few years. At the end of the Obama administration, the Department of Justice issued detailed guidance to HR professionals regarding how the DOJ and the Federal Trade Commission view wage-fixing and no-poaching agreements. In a substantial policy shift, the agencies revealed they would begin pursuing criminal charges under the Sherman Act against companies and individuals engaging in such behavior. Criminal penalties can be severe — companies can be fined up to $100 million, while individual employees instituting such agreements can be fined up to $1 million and can serve up to 10 years in federal prison.
Under a new presidential administration, there were questions about whether the increased scrutiny of these types of arrangements would continue. However, the DOJ and FTC under President Trump have made clear the agencies’ intentions to continue to fervently prosecute these agreements. The agencies announced earlier this year a new wave of enforcement actions against employers regarding no-poaching agreements. Despite the change in administrations, the antitrust risk for employers does not appear to be subsiding anytime soon.
Health care HR professionals should take particular care to ensure compliance in this area. With strong competition for nurses, some health care facilities have attempted to engage in these kinds of agreements to keep good employees. The results have been disastrous in some cases. Health care institutions in the Detroit area shared various employment and wage information of their nurses, resulting in a $90 million class action settlement in favor of the nurses.
Normally, Sherman Act violations require that an anti-competitive effect be shown before the DOJ will pursue penalties, but the agency considers the kind of wage-fixing and no-poaching agreements found in Detroit to be “per se illegal,” meaning the DOJ will pursue harsh penalties regardless of any anti-competitive effect the agreement has.
Antitrust compliance is likely not something at the forefront of most HR professionals’ minds, but ignoring it can be risky. Employers should analyze any agreements or policies regarding sharing of wage information with competitors or policies not to poach competitors’ employees. These agreements need not be formal or written contracts, as even informal policies of sharing compensation information can give rise to investigations by the DOJ or FTC and can be used as evidence of implied agreements to harm competition. Even if an investigation finds the policy to be in compliance, the process of the investigation itself is a less than enviable position to be in for employers. Employers should work with counsel and human resources professionals to mitigate the risk of noncompliance.
Woods, Fuller, Shultz & Smith has the largest team of employment lawyers in the state. Visit woodsfuller.com to learn more.
Once an employer successfully finds a quality employee, it’s understandable for the company to take measures to keep that employee. However, sometimes these measures create worse problems than they solve.