October 31, 2019
Halloween Trix: Don’t Wage Fix!
On October 31st, the Federal Trade Commission (FTC) issued a press release reminding employers and HR professionals to avoid anti-trust violations. The FTC settled a lawsuit alleging two small business owners entered into an agreement to lower wages to their contracted therapists and invited four other competitors to collude on these rates. The Commission alleged that their agreement was per se illegal and harmed competition. This issue is not new. In the last 25 years, the FTC has settled a number of related lawsuits:
- in 2011 against Lucasfilm and Pixar as well as six other companies
- in 2014, against Ebay and Intuit
- and, perhaps most near-and-dear to our HR Pros’ hearts, a state Society for Healthcare HR Administration back in 1994.
As a result, in October of 2016, the FTC and Department of Justice issued a joint publication , “Antitrust Guidance for HR Professionals.” The stated purpose was to “educate and inform HR professionals and others involved in hiring and compensation decisions about how the antitrust laws apply in the context of employment.”
In April 2018, the FTC announced a settlement to resolve a department lawsuit alleging that two companies had for years maintained unlawful agreements not to compete for each other’s employees.
In May 2019. a US District Court announced a settlement of $54.5 million with “unprecedented injunctive relief” after four years of “hard fought” litigation. It was described by the court as “the second largest per capita recovery ever by a class of employees asserting antitrust claims.” The lawsuit claimed two entities entered into a no-poach agreement, agreeing “to eliminate competition for each other’s medical faculty.”
Lessons Learned? Even informal conversations about wages and compensation between HR pros, business owners or managers can infer collusion to fix wages. Similar conversations about agreeing to not engage in corporate raiding may have the same outcome. The same rule may be applied to third-parties representing one or more employers, like professional or trade associations. Such was the case in a 2007 settlement where a hospital association was acting on behalf of most hospitals in Arizona to set a uniform bill rate schedule that the hospitals would pay for temporary and per diem nurses.
These rules also apply to conversations at social events and non-professional settings. For more tips, check out the FTC’s publication “Antitrust Red Flags for Employment Practices” here.