DOJ announces plans to review no-poaching agreements

The U.S. Department of Justice’s (DOJ) Makan Delrahim, assistant attorney general for the antitrust division, recently announced that the division is working on a number of criminal cases concerning companies that entered into so-called no-poaching agreements. In a no-poaching agreement, employers agree not to hire each other’s employees.

In October 2016, the DOJ and the Federal Trade Commission jointly issued the Antitrust Guidance for Human Resource Professionals (HR Antitrust Guidance). In the HR Antitrust Guidance, the antitrust authorities explain that “competing employers” may not agree to refuse to hire each other’s employees or to set terms of employment, e.g., wages, salaries, or benefits. The HR Antitrust Guidance made clear that employers could face civil liability for executing a no-poaching agreement, and that going forward the DOJ intended to pursue criminal charges against individuals and/or entities that entered into these agreements.

Delrahim commented on the antitrust division’s current plans and initiatives to review no-poaching agreements while speaking at a conference sponsored by the Antitrust Research Foundation. During his presentation, he made clear that the HR Antitrust Guidance should have been taken less as guidelines and more as a reminder that no-poaching agreements violate existing antitrust laws. As Delrahim pointed out, the HR Antitrust Guidance itself provides that “no poaching agreements among employers, whether entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws.

During his talk, Delrahim made several other significant announcements.

1. He emphasized that the antitrust division has “been very active” in reviewing no-poaching agreements for potential antitrust violations. 
2. He explained that the DOJ might bring civil claims against employers that executed no-poaching agreements before the HR Antitrust Guidance was released. 
3. He warned that the DOJ plans to treat the continued execution and/or enforcement of no-poaching agreements after the release of the HR Antitrust Guidance as criminal conduct. Consequently, entities or individuals who promote or participate in these agreements could face criminal prosecution.

According to Delrahim, the DOJ will make additional announcements in the coming months concerning its plans to enforce criminal and civil sanctions related to no-poaching agreements. Stay tuned.