Criminal Liability Attorneys Serving the Milwaukee Area

When it comes to U.S. antitrust law, there is a common misconception that only high-level executives for large, multi-national corporations need to be concerned about potential violations. Nothing could be further from the truth. In fact, not only do our antitrust laws cut a broad swath – affecting large and medium-sized companies alike – the Department of Justice (DOJ) and the Federal Trade Commission (FTC) scrutinize the activities of business executives up and down the corporate ladder. HR professionals are particularly prone to violations.

Federal Government Issues New Antitrust Guidance

In late October 2016, the DOJ and FTC released joint antitrust guidance for HR professionals, cautioning that “wink and nod” agreements between firms as to poaching and paying employees can result not only in civil fines, but criminal prosecution.

Some Anti-Poaching Agreements Are Illegal Per Se

Over the past several decades, federal courts have identified a number of activities that are always deemed to harm competition and, therefore, are illegal “per se.” For example, when two firms that compete for employees enter into an agreement either to fix wages or to avoid poaching one another’s workers, those agreements are, generally speaking, illegal under American law.

Four Tips to Avoid Liability

Those HR executives who want to avoid potential liability should review the new DOJ and FTC guidance and, where necessary, seek out the advice of experienced legal counsel. In the meantime, here are four tips to keep in mind.

Some Anti-Poaching Arrangements Are Completely Legal

Generally speaking, the risk of criminal liability applies to “naked” wage-fixing or no-poaching agreements. Some such agreements are truly ancillary to other legitimate activity. For example, where one firm purchases a unit of another, it is quite common that the selling firm will agree not to poach former employees for some reasonable period of time. Such an agreement is not a restraint of trade, since its purpose is to ensure the success of the primary agreement. Unfortunately, the line between “naked” and legitimate restraint of trade is fuzzy. Where there is any doubt, HR professionals should consult legal counsel.

Firms Need Not Be Direct Competitors to Violate the Law

Two companies need not be direct competitors for an agreement between the two for an agreement between the two to violate antitrust laws. The important issue is not whether the firms compete for customers; it is whether they compete for employees.

Truly Unilateral Decisions as to Pay or Terms of Employment Are OK

The new DOJ and FTC guidance does not apply to actions that are truly unilateral. For example, HR executives retain the right – unilaterally – to decide not to engage in a bidding war with executives in another business. When, however, one firm “agrees” with another about the terms of employment for an individual, it takes the chance of a violation. It is vital to remember that an “agreement” need not be in writing; it can be “a wink and a nod.”

All Terms of Employment – Not Just Wages – Are Subject to Antitrust Laws

Some HR executives think that as long as they don’t collude on wages, that they’re safe. Antitrust laws apply to any and all employment terms, not just wages. An agreement with another firm to limit new hires to a two-week vacation could well violate the law.

HR Execs Should be Careful Answering Wage and Benefit Surveys

HR executives should be particularly careful when completing wage and benefit surveys, since the answers supplied could be the basis for later entering into illegal agreements related to those wages and benefits. While some surveys are legitimate and, therefore, may be answered without liability, it is not always easy to discern which ones they are. For HR executives, there are a number of steps that companies can take to participate in wage or benefit surveys lawfully. HR departments should be careful and, where appropriate, consult with legal counsel before agreeing to participate in them.

Milwaukee Business, Employment, and Commercial Litigation Attorneys

Have you considered the implications of the new DOJ and FTC guidance on antitrust activity? Have you reviewed your HR policies to determine if you have any exposure to restraint of trade allegations? The Milwaukee business litigation firm of Kerkman Wagner & Dunn has more than 50 years of combined legal experience representing business owners in Wisconsin. Our firm has big firm talent and provides small firm attention. Call us at 414-278-7000 or complete our online contact form.

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