NO POACH/NO HIRE AGREEMENTS – US CRIMINAL INDICTMENTS

NO POACH/NO HIRE AGREEMENTS – US CRIMINAL INDICTMENTS

Epps & Coulson, LLP previously updated California employers that there was a concerted effort by both California and the US Government to stop all no-pouch/no-hire agreements among competitors, with the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issuing statements that the DOJ would prosecute these no-poach and/or wage-fixing agreements.  While the focus was the high tech and entertainment industries, it also included the healthcare and other industries.

Last year, the DOJ indicted DaVita, Inc., (a provider of dialysis services) and its former CEO on federal criminal charges, alleging anti-trust violations under Section 1 of the Sherman Act (“Conspiracy in Restraint of Trade to Allocate Employees”) based on allegations of agreements with competitors not to poach the other competitors’ employees.  The DOJ did not prove its claims at the trial held this month.  There was another DOJ case in Texas that went to trial this month too, where charges of violating the antitrust laws and wage fixing were prosecuted against a physical therapy (“PT”) staffing company and its director.  In this case, the owner of the PT staffing company was found guilty of obstructing the investigation, but not guilty of the antitrust violations.

The poor showing at these two lawsuits by the DOJ does not mean that the DOJ has given up, as it vowed to prosecute anticompetitive business activity and wage fixing.  The DOJ and FTC guidance stated that agreements among employers to limit or fix the terms of employment for potential employees may violate antitrust laws because companies that compete to hire or retain employees are competitors in the marketplace for the employees, whether directly or through a third-party intermediary (e.g. staffing company).  That is true even more, with staffing needs after businesses started reopening from the pandemic shutdown.  Employers should take heed to ensure employment and staffing agreements, policies and practices do not violate the anti-trust laws.  Businesses should also have in place compliance training and reporting to avoid the risks and ensure prompt adjustments to practices to avoid potential claims.  If there is any question whether certain conduct potentially could raise an anti-trust concern, businesses should seek advice.

If you have employment or contract questions or want to know more about our General Counsel program, please contact Dawn at: dcoulson@eppscoulson.com.

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is likely considered advertising.  Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.

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