FTC Settles Case Alleging Collusion Among Employers to Keep Pay Rates Low

financial accountingFederal law prohibits employers from engaging in practices that have an adverse effect on competition. This includes practices that harm consumers and those that harm employees. For example, employers engaged in the same business, who would ordinarily compete among each other for employees, may not enter into agreements with one another that diminish employment opportunities or set artificial limits on wages. Agreements not to solicit or hire one another’s employees, for example, can prevent those employees from advancing in their chosen careers. Agreements on wage limits impact employees’ ability to negotiate higher wages. The Federal Trade Commission (FTC), which enforces various federal consumer laws, may also investigate anticompetitive practices. It recently announced a settlement with a group of staffing companies, which it alleged violated federal law by colluding to limit pay rates. In the Matter of Your Therapy Source, LLC, et al, No. C-1710134, complaint (FTC, Jul. 31, 2018). Although the case did not involve events in New Jersey, federal antitrust and anticompetition laws have nationwide application. A New Jersey employment law attorney can help guide you in the right direction based on the unique facts of your situation.

The FTC was created by the Federal Trade Commission Act (FTCA) of 1914, 15 U.S.C. § 41 et seq. The statute prohibits “unfair methods of competition in or affecting commerce,” and authorizes the FTC “to prevent persons, partnerships, or corporations…from using unfair methods of competition in or affecting commerce.” Id. at §§ 45(a)(1), (2). It also specifically states that a finding of liability under the FTC Act does not preclude additional findings of liability under other antitrust statutes, such as the Sherman Antitrust Act of 1890. Id. at §§ 44, 45(e).

The respondents in the Your Therapy Source case operated staffing services that, according to the FTC’s complaint, provided therapists to “treat[] home health agency patients in the Dallas/Fort Worth, Texas area.” Your Therapy Source, complaint at 1. Although the companies competed with one another in the same market, the FTC alleged that they “agree[d], and invit[ed] other therapist staffing companies to agree, on rates paid to therapists.” Id. Ordinarily, therapists could “contract with multiple therapist staffing companies and choose among them based on pay rate” and other factors. Id. at 3. The agreement alleged by the FTC, however, prevented therapists from obtaining competitive pay rates.

The FTC alleged that the agreements between the respondents violated § 5 of the FTC Act, codified at 15 U.S.C. § 45. This had numerous adverse effects on workers, the FTC alleged, including “depriving therapists the benefits of competition among therapist staffing companies.” Id. at 5. The agency reached a settlement with the respondent prior to filing its complaint. It therefore filed the complaint and an order containing the settlement terms at the same time.

The order does not require payment of a fine, nor compensation to any therapists. It states that the respondents must cease and desist from entering into, or soliciting other for, agreements to limit pay rates. They must submit periodic compliance reports to the FTC, and must provide copies of the order to all current officers and directors, and to any individual who becomes an officer or director in the next three years.

The Resnick Law Group’s team of knowledgeable and experienced employment attorneys advocates for the rights of workers in New Jersey and New York, representing them in state and federal claims for unlawful employment practices. Please contact us today online, at 973-781-1204, or at 646-867-7997 to schedule a confidential consultation to see how we can help you.

More Blog Posts:

Court Rules on Liability of Individual Corporate Officers in New Jersey Wage Lawsuit, The New Jersey Employment Law Firm Blog, July 16, 2018

Federal Law Protects Privacy Rights of Employees and Job Applicants During Hiring Process, The New Jersey Employment Law Firm Blog, May 26, 2017

Employment Practices That Violate Antitrust Laws Can Have Both Civil and Criminal Penalties, The New Jersey Employment Law Firm Blog, December 9, 2016

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