No Poaching Guilty Plea Flags How to Mitigate the Risks

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On September 1, a healthcare staffing firm notified a federal court in Nevada that it intended to plead guilty to antitrust violations. He was accused of conspiring with a competitor not to raise the salaries of certain nurses or to recruit or hire nurses from each other.

This case signals the increasing enforcement of the Department of Justice against illegal labor market agreements.
Early detection of these types of agreements can provide employers, employees and their business partners with options and potentially reduce or eliminate exposure to crime.

In reviewing the DOJ’s recent enforcement actions, there are a few takeaways companies can use to help mitigate antitrust risks.

Law enforcement against poaching and wage fixing

Antitrust criminal enforcement of labor market collusion laws has increased significantly in recent years.

In 2016, the DOJ announced a policy change to criminally prosecute employers and individuals who enter into wage-fixing or non-poaching agreements with other employers.

In 2021, President Joe Biden issued an executive order that, among other things, encouraged the DOJ and the Federal Trade Commission to broaden and strengthen enforcement against “wage collusion” and other illegal labor market agreements. .

Since 2021, the DOJ has filed criminal charges in several labor market collusion cases. All of these cases have survived motions to dismiss but ultimately ended in acquittals until this most recent case, marking the DOJ’s first-ever victory in the criminal labor market.

Early detection is vital

Early discovery of potentially problematic labor market agreements gives employers more options and reduces the risk of charges.

Criminal violations of antitrust laws can result in serious consequences, including fines and jail time. In addition, third-party business partners, such as recruitment, recruiting and organizational consulting firms, may also be involved.

Antitrust violations can be avoided by educating key employees (management, human resources, and legal personnel) and outside business partners about the specific issues that can create risk.

This includes knowing how to identify violations and how business objectives can be achieved without incurring potential criminal antitrust liability. Creating and implementing internal antitrust compliance policies will mitigate legal and business risks.

Additionally, if a potentially illegal labor market agreement is uncovered, a DOJ leniency program allows the first company or person who claims to have participated in the illegal agreement and cooperates fully with the DOJ to avoid a criminal conviction and resulting fines and incarceration.

How to Mitigate Antitrust Risk

Ensure management awareness

Since the criminal enforcement of illegal labor market agreements is still a relatively recent development, many executives may be unaware that entering into an oral contract with a competing employer could result in massive financial penalties, or even lead them in prison.

Providing targeted, salient, and easy-to-implement antitrust compliance advice to executives and anyone involved in hiring decisions is the most effective and cost-effective way to limit the risk of entering into an illegal deal in the marketplace. work.

Train HR to identify red flags

HR personnel generally do not enter into illegal labor market agreements themselves. More generally, they receive information or instructions from other employees or business partners indicating a potential arrangement or understanding with another employer.

HR partners (internal HR employees and external partners) should be trained on how to identify potential red flags. This includes instructions not to recruit or hire at a particular company, compensation decisions based on agreements with other employers, and sharing or receiving confidential compensation or hiring information from another company. .

It may also be helpful to distribute the DOJ and FTC Antitrust Red Flags for Employment Practices Quick Reference Card to HR personnel.

Know what sensitive information can be shared

Sharing compensation and employment information is not illegal, but should be done with caution.

It is also useful for HR employees to attend conferences to learn industry best practices, and it may even be necessary to share this information, for example when evaluating a merger, an acquisition or joint venture proposal.

The criminal prosecution of a violation of labor market antitrust laws requires an agreement between two or more people or companies not to compete with each other in recruiting or retaining employees.

But an agreement doesn’t have to be formal or in writing to violate antitrust laws — an informal agreement or other tacit or implied agreement regarding employee compensation or hiring is also prohibited.

While the DOJ’s indictment in the most recent case seems to indicate clear communications reflecting non-poaching and wage-fixing agreements, antitrust violations can be inferred from information exchanges between companies.

So while sharing competitively sensitive information, such as information on compensation and benefits or recruitment strategies, does not in itself justify a criminal conviction, the possibility of an investigation or costly and disruptive criminal prosecutions should give employers pause.

The exchange of competitively sensitive hiring or compensation information should be done in a manner that incorporates the advice of an antitrust attorney.

This article does not necessarily reflect the views of the Bureau of National Affairs, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Author Information

Lauren Norris Donahue is a partner in the Chicago office of K&L Gates, where she focuses her practice on domestic and international internal investigations, corporate criminal defense, complex commercial litigation and antitrust counsel. She is a member of the Antitrust, Competition and Trade Regulation and Investigations, Law Enforcement and White Collar Practice Groups.

Derek Sutton is a partner in the Raleigh, North Carolina office and a member of the Antitrust, Competition and Trade Regulation Practice Group.

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