New Antitrust Guidelines for Human Resource Professionals

October 21, 2016

On October 20, the Federal Trade Commission and the Antitrust Division of the Department of Justice issued guidance for human resource (HR) professionals on how the antitrust laws apply to hiring practices. According to the agencies, competition to recruit and retain employees is essential to the job market. That competition is impeded when companies that would otherwise compete with one another to recruit or retain the same employees enter into “no-poaching” agreements or agreements to fix employees’ wages, for example. 

According to the Antitrust Division, no-poaching or wage-setting agreements should be treated similarly to hard core cartel conduct, such as agreements among competitors to fix prices or allocate customers. As a result, the Antitrust Division indicated that it intends to pursue criminal investigations into these types of agreements going forward should the Division find that the agreements are not reasonably related to a broader legitimate collaboration among competitors. According to the Antitrust Division’s Acting Assistant Attorney General Renata Hesse, “Antitrust violations in the employment arena can greatly harm employees and impact earnings over the course of their entire careers. HR professionals need to understand that these violations can lead to severe consequences, including criminal prosecution.” Furthermore, anticompetitive agreements that do not rise to the level of a criminal violation may nonetheless lead to civil liability.

The agencies’ guidance also touches on the permissibility of competitors sharing sensitive employment information, such as compensation details, either directly or via third parties. Sharing information with competitors about terms and conditions of employment may violate the antitrust laws even if it does not result in an explicit agreement not to compete. However, it is possible to design and carry out information exchanges in ways that conform with the antitrust laws by, for example, aggregating the information to protect the identity of the underlying source data.

The agencies’ guidance includes a helpful Q&A section that explains the application of the antitrust laws in various everyday employment situations. In addition, the agencies have issued a summary of their guidance in a convenient, quick-reference format, available here.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Courtney Dyer, an O'Melveny partner licensed to practice law in New York and Washington, D.C., and Courtney Byrd, an O'Melveny counsel licensed to practice law in Maryland and Washington, D.C., contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted. 

Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York's Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, Phone:+1-212-326-2000. © 2016 O'Melveny & Myers LLP. All Rights Reserved.