Our economic system depends on the competition of individuals and businesses in a free market, subject to reasonable regulations. When one or more “persons”—a legal term that includes individuals and various types of businesses—take actions that make their segment of the market less competitive, they may be in violation of federal or state antitrust laws. These statutes prohibit employment practices, such as “wage-fixing” agreements among competing companies, that unfairly harm employees’ interests. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently issued a guidance document, entitled “Antitrust Guidance for Human Resource Professionals,” addressing the enforcement of federal antitrust laws. In addition to civil penalties, the DOJ has the authority to pursue criminal charges for anticompetitive practices in some situations. The guidance document advises human resources (HR) professionals to enact policies aimed at avoiding civil and criminal liability for their employers.
Congress passed the Sherman Antitrust Act, 15 U.S.C. §§ 1 through 11, in 1890 in order to combat the formation of monopolies that could take over control of entire markets or commodities, such as oil or steel. When a single company has control over a particular product or service within a market, consumers typically suffer because of factors like the lack of incentive to keep prices at a reasonable level. Employees can also suffer when there is no other employer who has need of their skills. Federal laws and many state laws allow state regulators to take steps to prevent actions, such as mergers of two or more formerly competing businesses, that could lead to a monopoly.
Employment practices that could violate antitrust laws include certain agreements among competing companies, such as:
– Wage-fixing: multiple employers agree to keep wages at a certain level; or
– Non-poaching: employers agree not to solicit or hire each other’s former employees.
Antitrust laws may also prohibit actions by employers in preparation for agreements like these.
The Sherman Act authorizes the United States Attorney’s Office, which is part of the DOJ, to pursue claims for antitrust violations. The statute makes it a felony offense to “make any contract or engage in any combination or conspiracy hereby declared to be illegal.” 15 U.S.C. § 1. The maximum fine for a corporation is $100 million, and it is $1 million for “any other person.” Id. Congress established these amounts in 2004, raising them from $10 million and $350,000, respectively. The maximum prison sentence is 10 years. Criminal enforcement, rather than civil, is fairly rare.
The DOJ/FTC guidance document is directed toward HR professionals, stating that they are “often are in the best position to ensure that their companies’ hiring practices comply with the antitrust laws.” The document identifies employment practices that might violate the Sherman Act, and it advises HR professionals to “implement safeguards” against “inappropriate discussions or agreements with other firms.” It states that the federal government may initiate civil or criminal proceedings, or both, for violations. It also mentions several recent enforcement actions involving employment practices, including one involving an agreement among most of the hospitals in an entire state setting a “uniform bill rate” for temporary and per diem nurses. United States, et al. v. Ariz. Hospital and Healthcare Assoc., et al., No. 07-cv-01030, final judgment (D. Ariz., Sep. 12, 2007).
If you need to speak to an employment attorney about a legal matter in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at 646-867-7997.
More Blog Posts:
Proposed Law Would Protect Rights of Workers in the “Gig Economy”, The New Jersey Employment Law Firm Blog, October 13, 2016
Proposed Jersey City Ordinance Would Mandate Minimum Work Week for Certain Employees, The New Jersey Employment Law Firm Blog, June 20, 2016
Court Rejects Proposed Settlement in Class Action Lawsuit Alleging Wage Fixing by Silicon Valley Employers, The New Jersey Employment Law Firm Blog, October 23, 2014
Photo credit: “Standard Oil cartoon with octopus” by Udo J. Keppler (1872-1956) [Public domain], via Wikimedia Commons.