The Department of Justice Antitrust Division (DOJ) and the Federal Trade Commission (FTC) have been increasing scrutiny and enforcement of antitrust laws over the past several years, including pursuing criminal prosecution in some cases. Just recently, the DOJ announced it filed lawsuits against a data consulting firm and three poultry processors alleging collaboration with competitors on compensation decisions. While initial antitrust laws were intended to protect consumers, they can apply to almost anything that is used to attract, retain, or restrict employees.

Agreements with Other Employers

Employers are considered competitors in the labor market, even if they don’t deliver the same products or services. Therefore, agreements among competing employers may violate antitrust laws if they involve decisions relating to compensation, benefits, job opportunities, and other terms of employment. According to the DOJ, agreements do not have to be formal written documents to violate antitrust laws. Such agreements may be formal or informal, written or unwritten, spoken or unspoken.

Unlawful agreements can involve salary or other terms of compensation (wage-fixing agreements), or agreements not to solicit or hire the other company’s employees (no poach agreements).  

Inferences of Agreements

Even if the employers do not expressly agree to limit employee compensation or recruiting, other circumstances (e.g., evidence of discussions about these topics or parallel behavior) may lead to an inference that an agreement exists.

Employers should avoid exchanging certain sensitive information that may impact competition in the labor market, and train their employees, particularly managers, on what information may and may not be shared with other employers and their employees. 

The DOJ has taken the position that evidence sharing current compensation information in an industry with few employers could establish an antitrust violation because the data exchange has decreased or is likely to decrease compensation. 

What Can Employers Do?

Not all information sharing will constitute an antitrust violation. The DOJ has provided guidance for the lawful exchange of information if: 

• a neutral third party manages the exchange;
• the exchange involves information that is relatively old;
• the information is aggregated to protect the identity of the underlying sources; and 
• enough sources are aggregated to prevent competitors from linking particular data to an individual source. 

HEC’s compensation surveys are designed to comply with these guidelines. Our surveys provide valuable information to aid in decision making without running afoul of antitrust laws regarding employee wages.

Additionally, employers may consult the DOJ’s Evaluation of Corporate Compliance Programs in Criminal Antitrust Investigations to evaluate their internal antitrust policies. This guidance outlines nine factors in assessing the effectiveness of an antitrust compliance program: 

1. Design and comprehensiveness of the program; 
2. Culture of compliance; 
3. Responsibility for, and resources dedicated to, antitrust compliance; 
4. Antitrust risk assessment techniques; 
5. Compliance training and communication to employees; 
6. Monitoring and auditing techniques, including continued review, evaluation, and revision of the antitrust compliance program; 
7. Reporting mechanisms; 
8. Compliance incentives and discipline; and 
9. Remediation methods. 

In Hawaii, HRS §480 Monopolies; Restraint of Trade covers certain employment-related agreements such as non-compete and non-solicitation agreements. See our previous article on non-compete agreements here. 

Employers may reference the DOJ’s Antitrust Guidance for Human Resource Professionals, or consult an attorney on sound antitrust practices. HEC members may also contact their HR Consultant or call our hotline at 808-836-1511 with questions.