Competitive job markets offer more than just fringe benefits

Looking for a new job can be stressful, whether you are a new worker applying for your first job or a highly trained professional seeking to advance in your career. The last thing a job-seeker should have to worry about is a back-room deal among employers that keeps her from getting the job of her dreams or from being offered a fair salary.

Today, the FTC and the U.S. Department of Justice issued guidance to explain how the antitrust laws apply to job markets. While the guidance document is new, the principles are not; the antitrust laws apply to markets of all types, including job markets. Just as competition among sellers in an open marketplace gives consumers the benefits of lower prices, higher quality products and services, more choices, and greater innovation, competition among employers helps actual and potential employees receive the benefits of competition, such as higher wages, better benefits, or other terms of employment.

The guidance is intended for human resource professionals and others involved in hiring and compensation decisions. The messages are simple: workers are entitled to the benefit of competition for their services; and firms should avoid reaching agreements with competing employers that would fix wages or other terms of employment, or prevent them from competing for workers. HR professionals often are in the best position to ensure that their companies’ hiring practices comply with the antitrust laws. In particular, HR professionals can implement safeguards to prevent inappropriate discussions or agreements with other firms.

If you are an HR professional, the new guidance will help you and your company avoid running afoul of the antitrust laws. (We’ve even got a short list of red flags for easy reference.)

What types of agreements among employers are most likely to raise antitrust concerns? Agreements to fix wages, or so-called “no-poaching” agreements that prevent companies from recruiting each other’s employees. Unless these agreements are part of a larger legitimate collaboration between the employers, or are otherwise reasonably necessary to another legitimate arrangement or subject to a labor antitrust exemption, they are straight-up violations of the antitrust laws requiring no further inquiry into whether they actually affected wages.

Here is an example. Several years ago, the FTC charged several nursing homes with an illegal agreement to boycott a nurse registry that attempted to raise prices for nurses providing short-term services. Nursing home representatives met and discussed the proposed price increase, after which they separately sent letters indicating they would no longer use that registry. They then sent copies of the letter to other registries, and threatened to boycott them as well if they attempted to raise prices. The FTC’s antitrust suit alleged that the nursing homes conspired to eliminate competition among them for temporary nursing services, which depressed the price of those services. The FTC’s order put an end to the conspiracy. (In re Debes Corp., 115 F.T.C. 701 (1992)).

The DOJ has brought similar cases, including three high-profile cases involving technology companies that entered into “no poaching” agreements with competitors. (eBay and Intuit, Lucasfilm and Pixar, and Adobe, Apple, Google, Intel, Intuit, and Pixar) These cases were filed as civil antitrust violations, but in the new guidance, DOJ announces that it will now investigate naked wage-fixing or no-poaching agreements as potential criminal violations of the antitrust laws.

There are also potential antitrust risks when competitors share information about the terms and conditions of employment. For instance, exchanging competitively sensitive information about your company’s compensation rates or other terms of employment can raise antitrust concerns if it has an anticompetitive effect on compensation – even if the exchange does not result in an agreement on wages or other terms of employment. As outlined in the guidance, with proper safeguards, it is possible to exchange information with competitors in ways that conform with the antitrust laws.

Of course, not every interaction with a competitor creates antitrust risk. For instance, if your firm collaborates with other firms as part of a legitimate collaborative activity, no-poaching agreements or other restraints on recruiting workers may be reasonably necessary to that undertaking. Examples would be collaborations such as joint ventures, shared use of facilities, consulting services, outsourcing vendors, and mergers or acquisitions, among others. Unless the communication is part of a legitimate collaboration, you and others at your company should not communicate your employment or compensation policies to companies with whom you compete to hire employees, nor ask another company to go along.

Finally, merely inviting a competitor to enter into an illegal agreement may violate the antitrust laws – even if the invitation does not result in an agreement to fix wages or otherwise limit competition. In antitrust terms, an “invitation to collude” describes an improper communication to an actual or potential competitor that you are ready and willing to coordinate on price, output, or other important terms of competition. For instance, the FTC took action after an online retailer emailed a competitor to suggest that both companies sell their products at the same price.

Check out the Q&As for help navigating some common scenarios, and if you have information about a possible antitrust violation regarding agreements among competitors to fix wages, salaries, benefits, or other terms of employment, or agreements not to compete for employees in hiring decisions, contact the DOJ or the FTC.