Reviewing Recent Labor Market Prosecutions

The Antitrust Division continues to maintain its focus on labor market prosecutions. A “no poach” agreement involves an agreement “to refuse to solicit or hire that other company’s employees.” Key questions have arisen based on its enforcement efforts and cases, including:

• What lessons can be drawn from the jury acquittals and dismissals in the recent no-poaching and wage-fixing agreements prosecuted under Section 1 of the Sherman Act?
• Should cases focused on these types of agreements return to civil enforcement?
• Under what circumstances should the rule of reason apply instead of the per se rule?

The Antitrust Division traditionally resolved these issues in civil cases until 2016 when the DOJ and the FTC announced for the first time that, “Going forward, the DOJ intends to proceed criminally against naked wagefixing or no-poaching agreements” and “bring criminal, felony charges against the culpable participants … including both individuals and by companies.”

Since 2016, five no-poaching and wage-fixing agreements charged under the Sherman Act have been dismissed by three juries, one court at the close of the government’s trial case, and by the DOJ. (See Table.)

During the ABA National Institute on White Collar Crime in San Francisco on March 6, 2024, Director of Criminal Enforcement Emma Burnham confirmed that the Antitrust Division remains focused on criminal enforcement on labor market issues, including no-poach agreements.

Antitrust Division leaders continue to confirm their intent to bring criminal investigations and prosecutions involving labor markets. In December, the Principal Deputy Assistant Attorney General in the Antitrust Division confirmed to the Women’s White Collar Defense Association, “We look forward to charging more no-poach and wage-fixing cases”

The sole conviction in a no-poach case to date came from a plea agreement with a health care staffing company for a relatively low criminal fine of $62,000 and restitution of $72,000. The fine and restitution were a fraction of the litigation costs that would have resulted had the case proceeded to trial. Of note, the plea agreement was reached after two motions to dismiss the indictment were filed based on alleged government misconduct and the district court set an evidentiary hearing with witnesses. The parties then asked the court to continue the hearing and negotiated a resolution. In the same case, an individual entered into a pretrial diversion agreement—understood to be the first one for the Antitrust Division—and the indictment was dismissed upon the prompt completion of community service.

In continuing developments on no poach issues, on March 18, 2024, the U.S. Supreme Court denied certiorari review on a case asking whether per se analysis or the rule of reason should apply to intrabrand restraints and to no-hire agreements. As the questions were presented, “(1) Whether intrabrand hiring restraints are presumptively subject to per se Sherman Act analysis whenever they have a horizontal component; and (2) whether courts assessing a restraint under the Sherman Act must ignore procompetitive effects in related markets.” The case returns for further proceedings to the Seventh Circuit and district court.

(This article originally appeared in the March 2024 Cartel Enforcement Trends and Developments newsletter.)