Fair Warning: You Could Be Criminally Charged In Anti-Poaching Cases

 The U.S. Department of Justice put HR professionals on notice that they face the risk of criminal prosecution if they are linked to what is viewed as anti-competitive activity with competitors restricting employment opportunities, benefits and depressing wages, so-called anti-poaching agreements. In other words, if businesses in the same industry reach agreements not to hire each other’s employees or otherwise limit wages or benefits, there is a risk that the Department of Justice may investigate not only a civil claim of anti-competitive behavior, but may also move against employers and responsible individuals criminally.

Two federal agencies, the Department of Justice and the Federal Trade Commission jointly published “Antitrust Guidance for Human Resource Professionals” in October 2016 advising employers and specifically, HR professionals against entering into formal or informal non-poach agreements. Two months ago, the Department of Justice reminded HR professionals in conjunction with its settlement of an anti-poaching case, USA v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation, that subsequent investigations and prosecutions will likely include a criminal prosecution. The Department of Justice expressly explained that Knorr-Bremse did not include criminal charges because the anti-poaching agreements had stopped before the publication of the 2016 “Antitrust Guidance.” Nevertheless, the Knorr-Bremse parties are barred from enforcing or entering into no-poach agreements and agreed to subsequent inspections and compliance measures for some time. Additionally, the settlement is not a bar to any private lawsuits that affected employees might bring.

The Knorr-Bremse case is the first DOJ prosecution/settlement since 2010, when the department resolved anti-poaching cases against Adobe, Apple, Google, Pixar, Intel, and Intuit. Shortly after the settlement with the federal government, a class action civil case was filed against, essentially the same defendants, alleging violations of California’s antitrust statute, and right to compete law and in 2015, the court approved over $400 million in settlements for the certified class of 65,000 employees.

HR professionals will be well served to ensure that their employer does not engage in such activities and should be vigilant to inferences or possible evidence of potential anti-poaching agreements. Previous prosecutions were based on emails, verbal conversations, and inferences, not necessarily formal written agreements detailing anti-poaching behavior.

In particular, HR professionals should be vigilant against:

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  • discussions or agreements limiting compensation and/or benefits to those of competitors in the same industry;
  • conversations or emails where their company agrees not to solicit or hire another company’s employees;
  • exchanging compensation, benefit, employment or recruitment strategies with other companies in the same industry; and
  • agreements to not compete aggressively for employees that work for other competitors.

To ensure compliance, HR professionals should proactively:

  • Schedule compliance training for HR staff, recruiters and executives;
  • Create or update written policies to prevent anti-poaching agreements; and
  • Consult with counsel as soon as any issues or concerns are identified.

And, HR professionals need to be aware that the DOJ’s Antitrust Division has an “amnesty” program to encourage people with concerns to report to the government and protects these persons from criminal prosecution, fines and jail time.

The Department of Justice’s directives make it imperative that HR professionals and their employers comply with all antitrust laws, including the bar on anti-poaching, to avoid the disruption, costs, scrutiny and threat of civil and criminal prosecution. Therefore, if an HR professional encounters any suggestion, communication or direction that arises internally, as part of an industry meeting or conference, internally or from a representative of a competitor, that HR professional should immediately consult with appropriate counsel to protect against claims that the conduct might violate antitrust law.

Dan M. Forman is managing partner in the Los Angeles Office of Carothers DiSante & Freudenberger LLP, an award-winning California employment, labor, and business immigration law firm providing litigation defense and counseling to California employers. Forman is a renowned expert in the expanding field of trade secret litigation and currently is Chair of CDF’s Unfair Competition and Trade Secret Practice Group. He has nearly 30 years of experience representing clients before a wide range of state and federal courts, as well as regulatory agencies such as the California’s Labor Commissioner, the Department of Fair Employment and Housing, the Employment Development Department, the Equal Employment Opportunity and similar agencies. To contact Forman, email him at dforman@cdflaborlaw.com or call (213) 612-6300.

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