Executive Summary: Although direct information sharing by competitors of product pricing has long been a basis for triggering findings of antitrust violations, other types of agreements and information sharing have raised antitrust concerns in the employment context. For example, employees in the technology industry have claimed that "no poaching" agreements between competitors suppressed their wages in violation of the antitrust laws. Additionally, in some situations, sharing HR information, such as salary information of non-union employees, may raise antitrust concerns. Employers should be aware of the developments in this area of the law to avoid unexpected liability.
No Poaching Agreements Among Tech Employers
After completing its 2010 investigation of the employee hiring practices of certain competitor software companies, the Department of Justice (DOJ) concluded that they had engaged in "facially uncompetitive" understandings that limited job opportunities for employees of the participating companies. The DOJ concluded that the companies had an understanding that they would not compete for each other's engineers. For example, the participating companies had shared information with each other when one of them made a job offer to an employee of a competitor company. The DOJ ordered the companies to end these practices.
Subsequently, employees who worked as software engineers for the participating companies filed a lawsuit claiming the companies engaged in wage suppression policies that violated antitrust laws. Among other things, the employees claimed that the companies restricted recruitment and hiring of competitor's employees through their direct exchange of job information and applied wage caps for categories of jobs. The employees claimed these practices depressed workers' pay below market standards. In July 2013, three companies (Intuit, Pixar and Lucasfilm) reached monetary settlements with some of the plaintiffs on the claims.
Other major technology companies continue to be involved in the litigation. Recently, the Ninth Circuit affirmed an October 2013 decision by a federal trial court that certified a class of affected employees, permitting them to proceed with their antitrust class action lawsuit. Siddharth Hariharan v. Adobe Systems Inc. case number 12-80223. The trial date has been set for May 27, 2014.
Sharing of Wage Information
Direct information sharing by competitors of product pricing has long been a basis for triggering findings of antitrust violations. United States v. Container Corporation of America, 393 U.S. 333 (1969). Sharing price information, however, is not the only suspect practice under antitrust laws. Sharing of key cost information by competitors may also trigger scrutiny under antitrust laws. Recent cases have confirmed that sharing of HR information such as salaries of non-union employees by competitors can also create antitrust exposure for employers. See Cason-Merenda v. Detroit Medical Center, 862 F. Supp. 603 (E.D. Mich. 2012) (hospital sharing of wage information for nurses); Fleischman v. Albany Medical Center, 728 F. Supp. 2d 130 (S.D. N.Y. 2010) (direct coordination by HR personnel of current and future wages).
Employers often use wage surveys to remain competitive in the offering of wages and benefits to employees. However, the direct exchange by competitor employers with one another sets up the potential for allegations of combinations in restraint of trade that violate the antitrust laws. Similarly the direct sharing of wage information without safeguards in the contexts of trade association meetings can also trigger antitrust concerns.
The Federal Trade Commission (FTC) has provided guidelines to trade association members regarding the types of behaviors that can be considered, with appropriate procedures and safeguards, as procompetitive and within the standards of antitrust compliance. HR professionals sometimes are not aware of the potential exposure to liability under the antitrust laws or of the need to follow FTC "Safe Harbor" guidelines. These guidelines include, for example, using a neutral third party to collect the data and aggregate it so that specific data for a particular competitor is not disclosed.
Sound compliance programs in company and trade association policies will consider and address the needs for training and following "Safe Harbor" practices to avoid the potential for costly litigation involving either government regulatory bodies or private lawsuits, or both. For guidance on training, and antitrust compliance checklists in the area of employee wage and benefit policies, please contact the author of this Alert, John Allgood
, who is an attorney in our Atlanta office. You may also contact the FordHarrison attorney with whom you usually work.