September 27, 2023

Consequences Are Dire When You Conspire

It is beyond rude to collude; it may also be unlawful. That’s what one lawsuit is alleging against 17 companies: 15 employers and two consulting firms. The class action represents “hundreds of thousands” of employees. Claims include:

  • The defendants participated in an annual salary survey that was distributed by a third-party vendor, but defendants “collectively managed and controlled” the survey and determined who could participate;
  • the defendants would hold group calls without the consultant to “ensure everyone is on the same page”;
  • after two antitrust lawsuits were filed, defendants stopped participating int he survey but conducted ad-hoc surveys via email;
  • another consulting firm that provided compensation surveys provided anonymized results to the defendants but the data was “detailed enough that competitors could identify one another;”
  • Wage depression: at least two defendants agreed to “not recruit or solicit each other’s employees” aka a no-poach agreement, which suppressed wages;

This week, the judge denied the defendant’s motion to dismiss the lawsuit, “plaintiffs sufficiently allege…specific factual examples of wage depression that support their claim of broader wage depression.”

Words of wisdom.

  • The judge writes, “Exchanging data on future compensation as opposed to exchanging data limited to current wages supports a plausible inference of an agreement to fix compensation…[it] is indicative of anti-competitive behavior.”
  • The judge noted that excluding the consultant from defendants’ conversations about compensation, “adds support for plaintiffs’ allegations that the interfirm communications were not lawful.”
  • If you are an HR practitioner and have not read the FTC’s 2016 guidance and “Antitrust Red Flags for Employment Practices,” click here. The latter suggests HR professionals should not, “Participate in a meeting, such as a trade association meeting, where the above topics [terms of compensation or employment] are discussed…Discuss [those] topics with colleagues at other companies, including during social events or in other non-professional settings.”