26 MARCH / APRIL 2017 Beware of Antitrust Risks In the workplace Debra A. Mastrian Partner SmithAmundsen LLC dmastrian@salawus.com SmithAmundsen LLC is a Diamond Associate Member of the Indiana Bankers Association. Article author HUMAN RESOURCES Antitrust laws apply not only to the sale of products and services, but also to the workplace. Financial institutions, like all employers, must be aware of antitrust risks in hiring decisions and in sharing sensitive information with competitors. Last fall the U.S. Department of Justice and Federal Trade Commission, the federal agencies responsible for enforcing antitrust law, jointly issued an alert titled “Antitrust Guidance for Human Resources Professionals” and signaled a potential increase in enforcement actions. The agencies expressed concern about companies suffocating competition in the workplace through agreements not to hire each others’ employees and by sharing information about wages. While the Antitrust Guidance is aimed at HR professionals, executives and board members also should be aware of the risks, because they face potential liability for antitrust violations. The DOJ warned that it may bring criminal charges against the “culpable participants in the agreement, including … individuals.” In addition, individuals who are aggrieved by the illegal agreement may sue for treble damages (i.e., three times the actual damages) and attorneys’ fees. It remains to be seen whether the change in administration from President Obama to President Trump will affect the threatened escalation of action; however, employers should remain mindful of the Antitrust Guidance. The two main takeaways from the Antitrust Guidance are: 1. Naked wage-fixing and no-poaching agreements among companies are illegal. Agreements among companies to set compensation at a given level (wage fixing) and to not recruit each others’ employees (no poaching) are illegal, if they are not related to a legitimate business interest or collaboration between the companies. This is true whether the agreements are direct or indirect – through a third party – and whether they are in writing or verbal. Moreover, it does not matter if there is no actual harm or negative effect on competition. Even if companies are not competitive with each others’ business, if companies compete to hire and retain employees, they are competitive in the employment marketplace. There are some exceptions. The restrictions listed in the Antitrust Guidelines do not extend to no-poaching or confidentiality provisions that are related to legitimate business transactions. Thus, restrictions included in severance, joint venture or vendor agreements are not illegal per se. They are part of a broader, legitimate business endeavor. However, the restrictions must be reasonable in length and scope. For example, a non-solicitation provision in a vendor agreement should expire within a reasonable time after the termination of the vendor’s services and should not extend to every employee, but be limited to the types of employees involved in the provision of services. Or, in the situation of a potential merger or acquisition, a nonsolicitation provision that is part of confidentiality or non-disclosure agreement should expire within a reasonable time of the deal not being consummated. 2. Avoid sharing sensitive information with competitors. Sharing information with competitors regarding employee compensation, benefits or other work terms or conditions may violate antitrust laws. Even if there is no explicit agreement to fix wages or other terms of employment, exchanging competitively sensitive information could serve as evidence of an implicit illegal agreement. Further, “[e]ven if participants in an agreement are parties to a
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