Be Very Careful If You Discuss Wages and High-Level Hiring With Competitors, or You Might End Up in Jail

In 2016 the U.S. Department of Justice and the U.S. Federal Trade Commission released with little fanfare the Antitrust Guidance for Human Resource Professionals (Antitrust Guidance). Generally, the Guidance warned human resource professionals that agreements between competitors to set wages or to refrain from soliciting each other’s employees (“no-poach agreements”) could result in criminal prosecution under U.S. antitrust laws. Although the DOJ has pursued a number of civil cases since then, it did not obtain its first criminal indictment until December of 2020.

Wage Setting: In United States v. Neeraj Jindal, (E.D. Tex. Dec. 09, 2020) the U.S charged Neeraj Jindal, the former owner of a physical therapist staffing company, with violating the Sherman Act by conspiring with a competing physical therapist staffing company to fix wages for physical therapists and physical therapist assistants in the Dallas-Fort Worth metropolitan area. The DOJ specifically alleged that over a six-month period from March to August 2017, Jindal exchanged nonpublic information with his co-conspirators about the rates paid to physical therapists. The DOJ claimed that Jindal and his co-conspirators communicated about rate decreases, discussed and agreed to decrease rates paid to physical therapists, implemented rate decreases in accordance with the agreement reached, and paid physical therapists at collusive and noncompetitive rates. The DOJ produced numerous text messages between Jindal and his co-conspirators concerning the alleged conspiracy. (As I have said before, if you don’t want it read or seen in court, then don’t take a picture of it, text it or send it in an email.)

Non-Solicitation Agreements: In January of this year, the DOJ filed criminal indictment against Surgical Care Affiliates, LLC alleging that SCA, which owns and operates outpatient medical care centers across the country, entered into two separate bilateral conspiracies with other health care companies not to solicit senior-level employees, thereby suppressing competition for the services of those employees.

The DOJ alleges that beginning as early as May 2010 SCA and another company conspired to suppress competition between them by agreeing not to solicit each other’s senior-level employees. The DOJ also alleged that SCA conspired with another company to allocate senior-level employees through a similar nonsolicitation agreement. The DOJ claimed that SCA enforced its no-poach agreements by instructing recruiters not to recruit senior-level employees from the other two companies, by requiring senior-level employee applicants to notify their bosses when they were seeking other employment, by monitoring compliance with the no-poach agreements, and by refraining from soliciting each other’s senior-level employees. The DOJ has again provided emails between SCA and the other two companies admitting the existence of the agreements.

Take away: Employers, Executives and HR professionals, should be very careful when they communicate with their competitors regarding non-public information regarding wages and any sort of agreements not to attempt to hire away each other’s employees. While prosecution is far from common, we can count on the new administration to be much more aggressive in seeking criminal indictments for these types of activities.

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