Companies across industries should review hiring policies pre-emptively to avoid serious law enforcement consequences.
On October 20, 2016, the Department of Justice’s Antitrust Division (Antitrust Division) and the Federal Trade Commission (FTC) ( together the Agencies) announced that agreements between companies not to hire each other’s employees (no-poaching agreements) and agreements not to compete on salaries or terms of employment (“wage-fixing agreements”) will be “criminally investigated and prosecuted as hardcore cartel conduct.”1 Accordingly, companies and individuals who engage in this type of conduct may face substantial monetary penalties and jail time. The Agencies’ pronouncement represents a significant change in enforcement policy. To date, and going back to the first no-poach case the Antitrust Division filed in September of 2010, the government has treated such agreements as civil violations of the antitrust laws. However, with this guidance, the Antitrust Division has given warning that it intends to treat no-poaching and wage-fixing agreements the same way it treats agreements to fix prices of goods, allocate customers or reduce output, i.e., as criminal violations. This Client Alert describes the Antitrust Division’s recent policy on no-poaching and wage-fixing agreements, its implications, and advice for companies and individuals who may be affected by the Agencies’ new focus on hiring and compensation practices.