Red Flag Alert: Sharing HR Information Outside Your Organization Risks Federal Criminal Antitrust Li Red Flag Alert: Sharing HR Information Outside Your Organization Risks Federal Criminal Antitrust Li

Red Flag Alert: Sharing HR Information Outside Your Organization Risks Federal Criminal Antitrust Liability

In a little-noticed presentation to the Antitrust Research Foundation on Jan. 19, 2018, at George Mason Law School, Department of Justice Assistant Attorney General Makan Delrahim revealed the DOJ is preparing to file criminal charges against a number of yet-unnamed employers for violating federal antitrust laws. These criminal prosecutions, which could also be filed against individuals, will be highly publicized and undoubtedly alarming to many HR professionals and other organization leaders who have never focused on these issues. Mr. Delrahim, referring to the criminal cases his office is preparing, stated,  “In the coming months, you will see some announcements, and to be honest with you, I've been shocked about how many of these there are, but they're real.”

Approximately a year and a half ago, the DOJ and FTC released guidance entitled “Antitrust Guidelines for Human Resources Professionals,” https:///www.justice.gov/atr/file/903511/download. All HR professionals and, in fact, all corporate and organization leaders should take the time to review that document. These guidelines were issued a couple of years after the FTC filed complaints against and reached settlements with a number of high-profile tech companies for entering into agreements prohibiting their recruiters from “cold-calling” employees of the others.  

Due to the risk of personal and organizational criminal liability and potential civil liability to employees and others, employers should be aware of the following:
 
  • The antitrust laws apply to both for-profit and not-for-profit organizations.
  • Exchanging HR information, such as compensation and other terms of employment, with competitors can be used as evidence of “wage-fixing,” which is a classic criminal violation of antitrust laws. 
  • Keep in mind a "competitor" is not just an organization that produces the same goods or provides the same services as your organization. Organizations are “competitors,” for purposes of the antitrust laws, if they compete with one another for the same talent.  
  • Wage surveys can be lawful, but caution should be exercised and they should be conducted in a lawful manner by an independent third party. 
  • Do not discuss or enter into what are known as “naked” understandings or agreements with competitors not to solicit or hire one another’s employees. These agreements are also commonly referred to as “no-poaching agreements.” 
  • Not all non-solicitation or no-hire agreements will be unlawful. Such agreements that are reasonably related to an otherwise legitimate agreement may be lawful.
  • Aside from not discussing “no-poaching” agreements, you should not talk to a competitor about even informally reducing how aggressively you will pursue one another’s employees. 
  • Do not discuss or enter into any agreement with another organization that fixes or limits compensation or any other terms and conditions of employment, such as benefits, non-competes, or non-solicitation terms.  
  • You should consider adopting a policy that ensures your employees understand their obligations to avoid antitrust violations. As is the case with other policies governing employee conduct, this policy should warn employees that termination may result for any violation.
  • Publish your policy in your employee handbook, code of conduct, or code of ethics. If you do not have a handbook, the policy should be distributed, and you should make a record of how that was accomplished. 
  • As is true of non-harassment and discrimination policies, you should provide training to employees so they understand the importance of these policies. They also need to understand the serious individual and organizational risks that are presented if violations occur.
  • If you have employees who attend conferences, professional meetings, trade shows, and other meetings where competitors are present, you should consider reminding them of the policy before they attend such meetings.
  • If you have entered into any business contract with a competitor, take the time to review it again to ensure it does not contain any language that might be interpreted as violating the antitrust laws.
It is important to understand these rules because individuals who are guilty of antitrust violations can be sentenced to up to 10 years in prison and fined up to $1 million, and your organization may be fined up to $100 million. In some cases, liability may increase beyond those amounts. It is also important to keep in mind that the DOJ’s policy is to charge not only companies, but culpable individuals, and to seek prison sentences.

If you have questions, please contact Michael Blickman in our Labor, Employment and Immigration Group, at michael.blickman@icemiller.com or (317) 236-2298 or Tony Aaron in our Antitrust Group at anthony.aaron@icemiller.com or (317) 236-2484.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances. 
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