DOJ and FTC Issue Guidelines on Antitrust for Business Activities that Affect Workers

Fourteen days before President Trump assumed office, the Department of Justice (DOJ) and Federal Trade Commission (FTC) under the Biden Administration released their “Antitrust Guidelines For Business Activities Affecting Workers”. (“The Guidelines”) These Guidelines replace and extend the antitrust guidance that the Obama Administration issued for HR professionals in 2016. The new Guidelines clarify how the DOJ, FTC and other agencies “identify and assess” business practices that affect workers and may violate antitrust laws.

In specific, the new Guidelines address agreements and business practices that are antitrust violations that could trigger civil penalties or criminal liability.

1. Wage-Fixing and No-Poach Agreements

Wage-Fixing Agreements: These are agreements between businesses (or between individuals of different businesses) to fix wages or other terms of compensation, such as benefits and bonuses. The Agencies say these agreements may be illegal even if they only set a range, ceiling, or benchmark for calculating wages without setting a specific wage.

No-Poach/No-Solicit Agreements: These are agreements between businesses (or between individuals of different businesses) to not recruit, solicit, or hire workers. This could include an agreement to ask permission from the other business before hiring an employee. The Agencies claim that an agreement can be illegal, even if it doesn’t prohibit hiring workers from the other company. For example, an agreement not to “cold call” workers is considered a no-poach agreement by the Agencies regardless of whether the businesses are allowed to hire the workers who applied for a position without first being solicited.

Notably, the Agencies continue to identify no-poach and non-solicit agreements as potentially per se criminal violations of the antitrust law even after DOJ suffered a series of stinging losses in criminal no-poach trials.[1]

2. No-Poach Agreements Between Franchisor and Franchisee

No-poach agreements in the franchise context occur when franchisors and franchisees agree to not compete for workers. The updated Guidelines provide more information on no-poach contracts in the franchise context. The Agencies state that they could be illegal, regardless of whether the agreements actually harm workers. The Agencies state that a franchisor may also violate antitrust laws by organizing or enforcing a no-poach contract among franchisees who compete for workers. According to the Agencies, written and/or informal agreements between franchisees to not poach, hire or solicit each others’ workers could also violate state law.

3. Sharing Competitively Sensitive Information

According to the Agencies, sharing competitively sensitive information with your competitors, including terms and conditions of employment or compensation, may also violate the antitrust laws if the information exchange has (or is likely to have) anticompetitive effect. The Agencies discuss two areas of antitrust interest–information exchanges, and algorithmic collusion. They also state that information sharing can serve as evidence for a wage-fixing conspiracies, including information sharing facilitated by an algorithm or other third party. The Agencies go so far as to say that algorithms that generate wage recommendations may be unlawful even if businesses do not strictly adhere to those recommendations.

4. Non Compete Clauses

The Guidelines state that non-compete agreements that prevent workers from changing jobs or starting competing businesses can violate antitrust laws. The FTC had issued a rule that banned most non-compete agreements. However, a federal court in Texas overturned this rule in July 2024.

Other Employment ConditionsThe Agencies say they will also scrutinize any agreements that “impede worker mobility or otherwise undermine competition.” The Guidelines use the following examples as illustrative examples:

Employee non-disclosure agreements

• Training repayment agreements
• Non-solicitation agreements with employees
• Exit fee and liquidated damages agreement
• False earnings claims by employers

Other Employment Conditions

The Agencies say they will also scrutinize any agreements that “impede worker mobility or otherwise undermine competition.” The Guidelines use the following as illustrative examples:

Employee non-disclosure agreements

Training repayment agreements

• Non-solicitation agreements with employees
• Exit fee and liquidated damages agreements
• False earnings claims by employers

Finally, the Guidelines emphasize that antitrust laws that protect employees also apply to independent contractors.

[1]Will the Guidelines Have Staying Power in the new Administration?

Time will tell how the new Guidelines fare under the Trump Administration. On one hand, two Republican FTC Commissioners dissented from issuing the Guidelines–criticizing the timing “mere days before” the transition of power. The 2016 Obama guidelines have survived the first Trump Administration. The new Guidelines have already lasted a busy three weeks since the inauguration. The new Guidelines have already lasted a busy three weeks since the inauguration.01001010Given the continued antitrust focus on labor it remains wise for companies to:01001010Review hiring and compensation practices that implicate the types of activities the Guidelines cover–especially practices involving no-poach agreements, non-competes, information sharing, or hiring restrictions.01001010Review form or template agreements for employees and independent contractors to ensure compliance with antitrust laws.01001010Watch this space to stay up-to-date on the Trump administration’s approach to antitrust guidance and enforcement.01001010FOOTNOTES01001010 Ruling and Order on Defendants’ Motions for Judgment of Acquittal, United States v. Patel, No. 3:21- cr-220 (D. Conn. Apr. 28 2023 (D. Conn. Apr. 599.01001010

Story originally seen here