Tannenbaum Helpern Syracuse & Hirschtritt, LLP
About Us Careers Contact Us Search
Home Practice Areas Industries Case Results Attorneys Publications Events Press Room

New Guidance for Human Resource Professionals to Avoid Antitrust Violations

In today’s regulatory and enforcement environment, compliance with the antitrust laws is not solely the province of sales personnel. Human resource professionals also need to be aware of their obligations to avoid anticompetitive behavior. In October, the Antitrust Division of the U.S. Department of Justice (“Antitrust Division”) and the Federal Trade Commission (“FTC”) published guidance[1] to alert human resource (“HR”) professionals and other personnel to potential antitrust violations that could have serious civil and criminal consequences for their companies and themselves personally. Potential violations highlighted include anti-poaching and wage fixing agreements and communications among competing employers concerning any aspects of competition for employees or the terms and conditions of employment. In general, HR professionals should avoid entering into agreements, written, oral or tacit, regarding terms of employment with companies that compete to retain or hire employees.

The guidance points out that violations of the antitrust laws likely occur (i) when companies agree to limit employees’ salaries or other compensation terms at a certain level or within a certain range – wage-fixing agreements; or (ii) when companies agree not to solicit or hire one another’s employees – “no poaching” agreements. Examples of no poaching agreements include agreements among companies not to “cold call” each other’s employees and agreements to limit the hiring of employees who currently work at competing companies. Notably, the guidance makes clear that an oral or written agreement is not required to find a violation of the antitrust laws – circumstantial evidence such as “discussions and parallel behavior” can lead to an inference of an unlawful agreement among employers.

Moreover, naked no-poaching or wage-fixing agreements among employers are per se illegal under the antitrust laws, which means, absent a larger legitimate collaboration between employers, such as a joint venture to which such an agreement is reasonably necessary, the agreement is deemed illegal without any inquiry into the terms of the agreement or its competitive effects. The Antitrust Division intends to criminally investigate allegations of no-poaching and wage-fixing arrangements, and, if naked no-poaching or wage-fixing agreements are uncovered, it may exercise its prosecutorial discretion and bring criminal charges against culpable companies and individuals.

In addition to criminal proceedings, the Antitrust Division and FTC can bring civil enforcement actions against employers for violations of the antitrust laws, and injured parties (e.g., an employee or other private individual injured by an unlawful agreement among companies) can bring civil lawsuits for treble damages – three times the amount of damages the injured party actually suffered.

In addition, employers should caution HR personnel with respect to the sharing and exchanges of information about terms and conditions of employment with competitors as such an exchange (even absent a formal agreement to share information) “could serve as evidence of an implicit illegal agreement” depending on the circumstances. For example, periodic exchanges of compensation and benefits information among competitors in a low employer industry could constitute an antitrust violation because the exchange could have an anticompetitive effect. Such arrangements -- agreements to share information -- are not per se illegal, but can be found anticompetitive.

Information exchanges do not always violate the antitrust laws. They may be lawful when, for example: (1) a neutral third party makes the exchange; (2) the exchange involves relatively old information; (3) the information is aggregated to protect the identity of the underlying sources; and (4) enough sources are aggregated to prevent competitors from linking particular data to an individual source. In addition, a buyer in a potential merger or acquisition will likely need to obtain competitively sensitive information when evaluating whether to pursue the deal – information gathering in this case is likely lawful if the potential transaction is legitimate and the information is no more detailed than reasonably necessary.

Once a merger or acquisition is agreed upon, however, the parties must take special care not to let information exchange become, in effect, pre-merger integration. This is particularly true where the transaction is reportable, and requires regulatory approval, under the Hart Scott Rodino Antitrust Improvements Act (“HSR). The Antitrust Division and the FTC use the term “gun-jumping” to describe efforts to integrate the merger partners implemented before the transaction is approved. Gun-jumping is said to violate both § 1 of the Sherman Act and the HSR act itself. In the regulators’ view full competition must prevail to the bitter end. Thus, pre-merger information exchange concerning salaries, benefits or other terms of employment could be attacked as “gun-jumping,” particularly if efforts to adjust or equalize employment terms begin before regulatory approval.

Accordingly, in light of this new guidance, employers must be sure HR professionals are kept abreast of antitrust compliance issues and receive necessary training. Employers must ensure HR and other personnel are cautious in their communications with competitors and avoid agreeing to any arrangements that restrict competition on terms of employment or provide for the exchange of competitively sensitive information. In particular, employers must not enter into naked no-poaching or wage-fixing agreements that could subject the employer and culpable individuals to criminal liability. Further, never forget that agreements can be tacit. Circumstantial evidence of discussions among competitors coupled with parallel anticompetitive behavior can support a finding that an agreement existed even if an agreement is nominally disclaimed.

For more information on the topic discussed, contact L. Donald Prutzman at prutzman@thsh.com or Andre R. Jaglom at jaglom@thsh.com.

*A special thanks to Andrew Yacyshyn for his contributions to this article.

[1]https://www.ftc.gov/system/files/documents/public_statements/992623/ftc-doj_hr_guidance_final_10-20-16.pdf


About Tannenbaum Helpern Syracuse & Hirschtritt LLP

Since 1978, Tannenbaum Helpern Syracuse & Hirschtritt LLP has combined a powerful mix of insight, creativity, industry knowledge, senior talent and transaction expertise to successfully guide clients through periods of challenge and opportunity. Our mission is to deliver the highest quality legal services in a practical and efficient manner, bringing to bear the judgment, common sense and expertise of well trained, business minded lawyers. Through our commitment to service and successful results, Tannenbaum Helpern continues to earn the loyalty of our clients and a reputation for excellence. For more information, visit www.thsh.com. Follow us on LinkedIn and Twitter: @THSHLAW.

Publications
BulletPoint
GlobalNote
Business Litigation Bulletin
Employment Notes
Note from the Real Estate Group
THSH E-Alert
Other Publications
Inclement Weather Policy
Other Publications Archive
President Obama Seeks to Broaden Overtime Protections for Employees
Privacy regulation in the United States
The Broad Scope of Franchise Laws: Traps for the Distribution Contract Drafter
Managing Distribution: How to Develop a Corporate Legal Compliance Program
Internet Distribution, E-Commerce and Other Computer Related Issues
Distribution Contracts
What Impact Will FATCA Have on Offshore Hedge Funds and How Should Such Funds Prepare for FATCA Compliance?
The American Taxpayer Relief Act of 2012: What It Means to You
Privilege and the In-House Counsel: Protecting Your Communications Through Proper Registration and Careful Understanding
Are your digital communications protected by attorney-client privilege and what if privileged information is disclosed?
THSH Private Equity Roundtable Summary
Post Grant Review Under the America Invents Act
Bench-Bar Conversation with Justice Carolyn E. Demarest
Proposed Changes Set to Alter Estate and Gift Tax Structure in New York: Time to Make a Gift?
New York City Paid Sick Leave – What Staffing Firms Need to Know
New York State Estate and Gift Tax: The Hidden Costs of Tax Reform
Assessing Never-Examined SEC-Registered Investment Advisers: An SEC NEP Priority
Changes to NY Minimum Wage
NLRB Strikes Again
Bench-Bar Conversations with Justice Elizabeth Emerson
Attorney Professionalism Forum: What should an attorney do when the client wants to present false information and what happens
Reducing the risk of violating competition law
NY Rings in 2015 with a Minimum Wage Increase
Distribution & Agency 2015 - Q&A on the distribution of goods and services in 17 jurisdictions worldwide
Fair Chance Act
Sales Taxes on Construction Projects
Forget Big Brother, What Happens When it’s Opposing Counsel is Doing the Recording?
E-Discovery Identification & Preservation Guide For Lawyers (Version 2.0)
On the Horizon: What to do before selling your staffing business
Striking the Right Encryption Balance after FBI, Apple Fracas
Delaware Court Reiterates Need for Unambiguous Non-Reliance Provisions in M&A Agreements
Finalizing a Divorce? Wait, Just One More Thing …
IRS Proposed Changes to IRC 2704 Affect Business Succession and Estate Planning Valuation Discounts
Trump and the Estate Tax: What We Know
Actual-Intent Fraudulent Transfers and the Crime/Fraud Exception
Proposed NYS DFS Cybersecurity Regulations to Significantly Impact FS Companies
New Guidance for Human Resource Professionals to Avoid Antitrust Violations
Merger and Scènes à Faire: Two Defenses to Substantial Similarity in Copyright Litigation
What’s New in the Revised New York State Proposed Cybersecurity Regulation?
The Law of Insider Trading: A Primer For Investment Managers
Recent Cyber Attack On Law Firms Serves As A Wake-Up Call For Professional Services Firms
The Ambac Decision and the Future of the Common Interest Privilege Under the New York Law
Overview of Data Privacy and Cybersecurity Regulatory Landscape for Investment Advisers and Other Financial Services Companies
Global Ransomware Attack: Basic Security Measures Every Business Should Adopt
Distribution & Agency 2017- Q&A on the distribution of goods and services in 17 jurisdictions worldwide
New Copyright of Resource: Copyright Protection
Attorney Professionalism Forum: Using Per Diem Attorneys Plus An Addendum To The June Forum On Cybersecurity Ethics
Congressional Republicans Propose Sweeping Tax Reform
Attorney Professionalism Forum: Attorney-Client Confidentiality vs. the Customs Agent: Who Wins?
Attorney Professionalism Forum: Confidentiality Issues When Clients Don’t Tell The Truth
Rules for Equity Crowdfunding Effective May 16, 2016
Estate Planning Under Comprehensive Tax Reform
Attorney Professionalism Forum: Attorney Websites, Branding and Using Social Media
Attorney Professionalism Forum: Attorney Advertising And Self Promotion
NY Appellate Court Shifts Balance of Power in Commercial Real Estate Leases: Upholds Yellowstone Injunction Waiver
Recent Developments in Neighbor Litigation
Attorney Professionalism Forum: Communicating With Clients With Diminished Capacity
Attorney Professionalism Forum: Litigation Financing
Groundbreaking bipartisan Congressional Legislation could pave the way to fully legalized Marijuana
Conditions Precedents in Construction Contracts
Distribution & Agency 2018 - Q&A on the distribution of goods and services in 18 jurisdictions worldwide
Data Privacy Alert: California Consumer Privacy Act of 2018 Just Enacted
Attorney Professionalism Forum: Litigation Financing Confidentiality and Marijuana Ethics For Lawyers
U.S. Markets See First Cannabis IPO
NYS Department of Financial Services Issues Guidance to Banks on Servicing the Marijuana Industry
THSH Cyber Alert: GoDaddy the latest to leave S3 Bucket Unsecured
Legalized Adult-Use Marijuana Coming to New York?
NYS and NYC Sexual Harassment Prevention Laws
Are Your Website and Privacy Policy GDPR Compliant?
Attorney Professionalism Forum: Ethics and Best Practices For Law School Clinics
Beware of the AIA Form of Performance Bond
Attorney Professionalism Forum: Referral Fees and Using a Client as an Expert
Anecdotes from World’s Largest B2B Cannabis Conference
Attorney Professionalism Forum: Restrictive Covenants In Agreements Employing Lawyers
Turndown Service with that Hack: Marriott Hotels Announce Massive Data Breach
Attorney Professionalism Forum: Handling Confidential Client Information
Groundbreaking 2018 Farm Bill Portends Huge Changes to U.S. Cannabis and Hemp Industries
Attorney Professionalism Forum: The Challenges of Litigating Against Pro Se Parties
Articles By Topic
HRMinute
New York Law Journal
Attorney Professionalism Forum
Join Our Mailing List
Publication
Like us on FaceBook Follow us on Twitter Get LinkedIn with us Pin It! Email Us Print this Page

Sitemap |Terms of Use | Privacy | Attorney Advertising

Tannenbaum Helpern Syracuse & Hirschtritt LLP provides legal advice only to individuals or entities with which it has established an attorney-client relationship and such advice is based on the particular facts and circumstances of each matter. Contacting us through this site, or otherwise, will not establish an attorney-client relationship with us. Any e-mail or other communication sent to THSH or its lawyers through this site will not be treated as subject to the attorney-client privilege or as otherwise confidential and you should not include any confidential information in any such communication.