The Antitrust Division of the Department of Justice (“DOJ”) has indicated that, in the coming months, it intends to criminally prosecute companies that have entered into naked no-poaching agreements for violation of the antitrust laws.1 DOJ Assistant Attorney General Makan Delrahim announced the possible upcoming criminal charges at a January 19, 2018 conference hosted by the Antitrust Research Foundation. During his speech Delrahim referenced the DOJ’s 2016 guidance, which previously warned companies that an express or implicit agreement not to recruit or hire each other’s employees could be susceptible to criminal prosecution. Delrahim specifically called out activity that began prior to the issuance of the guidance and has continued from that time.2

Background

In 2016, the DOJ and the Federal Trade Commission (“FTC”) issued joint guidance for human resources professionals and others who participate in hiring and compensation decisions (the “HR Antitrust Guidance”).3 The HR Antitrust Guidance covered three areas, including the risk of no-poaching agreements, and indicated that agreeing companies do not have to compete for the same customers for the agreement to violate the antitrust laws; they merely have to compete for the same employees.4

A naked no-poaching agreement is “separate from or not reasonably necessary to a larger legitimate collaboration between employers,” and is per se illegal without regard to its competitive effect.5 The DOJ has previously obtained civil consent judgments for no-poach agreements with the companies agreeing to stop the prohibited conduct. Delrahim’s comments promise what would be the DOJ’s first criminal actions for these violations.

How to Respond

Although the HR Antitrust Guidance does not explicitly exempt any agreements from liability, it suggests certain legitimate joint efforts may not run afoul of the antitrust laws. The guidance is clear, however, that “informal or formal, written or unwritten, spoken or unspoken” agreements are all vulnerable to criminal penalties. It is important to note both employers and individuals can be liable.6

To reduce their antitrust risk, in-house legal departments should include HR professionals and more traditional personnel in their antitrust risk management and compliance strategy. In addition, companies should update their antitrust training, monitoring, and auditing strategies to ensure compliance.

 

  1. Matthew Perlman, Delrahim Says Criminal No-Poach Cases Are In The Works,
    LAW360.COM (January 19, 2018), available at https://www.law360.com/competition/articles/1003788/delrahim-says-criminal-no-poach-cases-are-in-the-works.
  2.  Id.
  3. Department of Justice Antitrust Division & Federal Trade Commission, Antitrust Guidance for Human Resource Professionals (Oct. 20, 2016), available at https://www.justice.gov/atr/file/903511/download (“HR Antitrust Guidance).
  4.  For a broader discussion of the 2016 HR Antitrust Guidance, see Arindam Kar & Philip D. Bartz, Agencies Issue Antitrust Guidance to Human Resources Professionals, (Nov. 2, 2016) available at https://www.bryancave.com/en/thought-leadership/agencies-issue-antitrust-guidance-to-human-resources.html.
  5. HR Antitrust Guidance at 3.
  6. Id.