"No Poaching" Agreements Could Be Subject to Criminal Enforcement by DOJ

Author: David B. Weisenfeld, XpertHR Legal Editor

February 5, 2018

The Department of Justice (DOJ) appears poised to bring criminal enforcement actions against employers that have "no poaching" agreements in place. A no-poaching agreement is an agreement between employers not to recruit certain employees or not to compete on compensation terms.

Speaking at an antitrust conference last month, the Antitrust Division's Assistant Attorney General Makan Delrahim said the DOJ will be announcing indictments charging criminal antitrust violations relating to these agreements within the next few months.

In October 2016, the DOJ and the Federal Trade Commission (FTC) had issued joint guidance for HR professionals warning companies for the first time that naked wage fixing or no-poaching agreements would be subject not just to civil penalties but also to possible criminal investigations and sanctions. These so-called "naked" agreements lack any legitimate collaboration or true joint venture between the companies.

The DOJ and FTC jointly enforce US antitrust laws, which apply to competition among companies to hire employees. Delrahim's statement was the first to indicate, since the 2016 guidance and subsequent administration change, that criminal charges could be on the way against employers.

The statement was silent as to noncompetition agreements. However, several states have taken action in the past few years to restrict noncompetes by limiting their duration or scope. Some other states are considering legislation to further limit the use of noncompetes.