On December 10th, the Antitrust Division of the U.S. Department of Justice announced its first criminal indictment targeting an alleged conspiracy to reduce employee wages. The DOJ charged the former owner of a therapist staffing company with conspiring to reduce pay rates for healthcare worker contractors, but did not charge the company itself. Specifically, the indictment alleges that, for a six-month period in 2017, the defendant and his co-conspirators exchanged non-public information on rates paid to healthcare workers; discussed and agreed to decrease rates paid to healthcare workers; implemented rate decreases in accordance with their agreement; and paid healthcare workers at collusive and noncompetitive rates. The indictment alleges that the defendant’s behavior constitutes a per se violation of the antitrust laws and seeks penalties including fines and potential imprisonment. The indictment also includes an obstruction of justice charge, stemming from allegedly false or misleading information the defendant provided the Federal Trade Commission during the agency’s investigation of the same subject matter.

For years, DOJ has been emphasizing the possibility of criminal charges for wage-fixing and other efforts to restrict competition in the labor markets. In 2016, the DOJ and FTC issued their joint Antitrust Guidance for Human Resource Professionals, warning human resource and other professionals involved in hiring that the DOJ would “criminally investigate allegations that employers have agreed among themselves on employee compensation or not to solicit or hire each others’ employees.” The Guidance further cautioned that, if a DOJ investigation “uncovers a naked wage-fixing or no-poaching agreement, the DOJ may . . . bring criminal, felony charges against the culpable participants in the agreement, including both individuals and companies.” In the four years since it was issued, the DOJ has opened a number of criminal investigations, but it had yet to bring a charge, and its criminal wage-fixing and no-poaching theories have remained untested in court.

The indictment underscores that enforcement agencies (and the DOJ in particular) are particularly focused on policing these types of anticompetitive agreements that restrict competition in labor markets. In addition to making clear that it considers wage-fixing and “no poach” agreements between employers to be per se violations of the Sherman Act, the DOJ has also been increasingly active in supporting private challenges to such restrictions. The indictment makes clear that such restrictions can now expose a company and individual participants in the conspiracy to criminal, as well as civil, liability.

These developments serve as a reminder for the need to closely adhere to the antitrust laws, including in areas that do not directly affect consumer prices (such as employee salaries or benefits). Compliance training, including for individuals involved in human resources and hiring, is an important tool for ensuring adherence and avoiding potential civil or criminal exposure down the road.

How Covington Can Help

Our antitrust practice group includes attorneys who served at the DOJ and FTC and who have decades of experience in advising on criminal antitrust matters. Our team has specific experience dealing with DOJ and counseling clients on these employee wage and “no poach” antitrust issues. We can provide detailed and practical insight into how these developments might apply, as well as compliance training for employees and briefings for senior management.

If you have any questions concerning the material discussed in this client alert, please contact the authors.

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Photo of Thomas Barnett Thomas Barnett

Thomas Barnett is co-chair of the firm’s Antitrust & Competition Law Practice Group. Mr. Barnett served as Assistant Attorney General in charge of the Justice Department’s Antitrust Division. He headed the Antitrust Division from 2005 to 2008, having previously served in the Division…

Thomas Barnett is co-chair of the firm’s Antitrust & Competition Law Practice Group. Mr. Barnett served as Assistant Attorney General in charge of the Justice Department’s Antitrust Division. He headed the Antitrust Division from 2005 to 2008, having previously served in the Division as Deputy Assistant Attorney General for Civil Enforcement from 2004 to 2005. He specializes in global antitrust and competition law practice and works closely with the firm’s white collar practice on criminal antitrust enforcement and investigative matters.

Photo of Anne Lee Anne Lee

Anne Lee, co-chair of the firm’s global Antitrust and Competition Law Practice Group, advises clients in complex antitrust litigation matters, strategic transactions, and government investigations. She represents clients before the DOJ and FTC on multi-jurisdictional mergers, competitor collaborations, and joint ventures, and she…

Anne Lee, co-chair of the firm’s global Antitrust and Competition Law Practice Group, advises clients in complex antitrust litigation matters, strategic transactions, and government investigations. She represents clients before the DOJ and FTC on multi-jurisdictional mergers, competitor collaborations, and joint ventures, and she has litigated cases at the trial and appellate levels in both state and federal courts. Ms. Lee also provides antitrust counseling on a wide range of business conduct and compliance issues. A recognized leader in the area, Ms. Lee has been named to the “40 Under 40” rankings of both The National Law Journal and Global Competition Review.

Photo of Phillip Warren Phillip Warren

Phillip Warren specializes in global antitrust and competition law practice, representing corporations and executives in criminal antitrust and other white-collar government investigations and litigation, and related multi-district class actions. He also provides corporate compliance counseling and conducts internal corporate investigations.

Photo of Derek Ludwin Derek Ludwin

Derek Ludwin advises clients on high-stakes antitrust litigation, criminal cartel and civil government investigations, transactions, licensing, and compliance issues. Mr. Ludwin has significant experience helping clients successfully navigate difficult, multi-faceted investigations and complex litigations, and has built a record of achieving positive outcomes.

Photo of Steve Fagell Steve Fagell

Steve Fagell represents companies, boards of directors, and senior executives in government enforcement matters, internal investigations, and shareholder litigation. He focuses on criminal and civil regulatory matters presenting complex legal, political, and reputational risks. He routinely represents clients before the US Department of…

Steve Fagell represents companies, boards of directors, and senior executives in government enforcement matters, internal investigations, and shareholder litigation. He focuses on criminal and civil regulatory matters presenting complex legal, political, and reputational risks. He routinely represents clients before the US Department of Justice, Securities and Exchange Commission, and other law enforcement and regulatory agencies. Mr. Fagell has advised clients in the life sciences, financial services, defense, technology, energy, and manufacturing industries on a variety of white collar matters, including those relating to foreign bribery, corporate whistleblowers, insider trading, accounting fraud, banking, government contracting, export controls, and transnational tax issues.

Photo of Sonia Lahr-Pastor Sonia Lahr-Pastor

Sonia Lahr-Pastor represents clients in a variety of complex antitrust matters. Her experience includes defending clients in class actions and multi-district litigations, cartel defense, and other high-stakes antitrust litigation. Ms. Lahr-Pastor has represented clients across a number of industries, including auto parts manufacturing…

Sonia Lahr-Pastor represents clients in a variety of complex antitrust matters. Her experience includes defending clients in class actions and multi-district litigations, cartel defense, and other high-stakes antitrust litigation. Ms. Lahr-Pastor has represented clients across a number of industries, including auto parts manufacturing, semiconductors, and sports.