‘No poaching’ and ‘wage fixing’ agreements may be illegal

Posted December 1, 2016

By Katie Loehrke, PHR, editor, J. J. Keller & Associates, Inc.

For any company that has lost a top performer to a competitor, a “no poaching” agreement might sound appealing.

But according to the Federal Trade Commission (FTC) and the Department of Justice’s Antitrust Division, such agreements, along with agreements to hold wages steady, may unlawfully limit a naturally competitive market to which employees are entitled.

These agencies have indicated that they will criminally investigate no-poaching and wage-fixing agreements and similar activities. The agencies recently advised human resources professionals to be wary of these and other related practices in their organizations, including:

  • Agreeing with another company about employee salary or other terms of compensation, either at a specific level or within a certain range;
  • Agreeing with another company about employee benefits or other terms of employment;
  • Exchanging company-specific information about employee compensation or terms of employment with another company;
  • Participating in a meeting (e.g., a trade association meeting) where employee compensation or terms of employment are discussed or discussing these topics with colleagues at other companies in nonprofessional settings; and
  • Receiving documents that contain another company’s data about employee compensation.

In its guidance, the FTC likened these types of behaviors to price fixing, which also limits competition rather than allowing the cost of goods to be determined based on supply and demand.

While certain exchanges of information may not be illegal (perhaps data is aggregated so competitors can’t link particular data to an individual source, or the information exchanged is relatively old), companies must be aware of the potential for their actions to violate antitrust laws.

About the author:

Katie Loehrke

Katie Loehrke is a certified Professional in Human Resources and an editor with J. J. Keller & Associates, a nationally recognized compliance resource firm. The company offers a diverse line of products and services to address the broad range of responsibilities held by HR and corporate professionals. Loehrke specializes in employment law topics such as discrimination, privacy and social media, and affirmative action. She is the editor of J. J. Keller’s Employment Law Today newsletter and its Essentials of Employment Law manual. For more information, visit www.jjkeller.com/hr.