Dive Brief:
- In the first no-poach settlement agreement since the U.S. Department of Justice (DOJ) released new guidance on the subject, the agency declined to pursue criminal charges against company representatives.
- DOJ said the case involved two of the worlds’ largest rail equipment suppliers, Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation (Wabtec). The employers allegedly maintained agreements not to compete for each other’s employees which, according to DOJ, restricted competition for industry workers, limited worker access to better job opportunities, restricted worker mobility and deprived them of information that could have been used to negotiate for better terms of employment.
- To resolve the suit, the employers agreed to end the agreements and prevent them in the future. The settlement also requires that they reimburse the government for its enforcement efforts and take steps to notify the public about the settlement.
Dive Insight:
This enforcement action is part of a broader effort to end no-poach agreements between employers. The federal government announced in January that it was looking at no-poaching and wage-fixing agreements and would soon be announcing charges. Such actions have been on the horizon since October 2016 when DOJ and the Federal Trade Commission issued a guidance document for human resource professionals in which it affirmed that it is illegal for employer representatives to agree to fix wages or to not hire one another’s workers. The agencies announced that they intended to pursue criminal charges against individuals involved, which could include prison sentences.
In this case, DOJ said it opted for civil enforcement because the government discovered the agreements — and the employer ended them — before the agencies had announced their intent to pursue criminal charges. The warning about criminal enforcement still stands.
DOJ said in this settlement that no-poaching agreements are illegal even if they don't ultimately have any anticompetitive effects. This is important to note, according to Morgan Lewis attorney Mark L. Krotoski; it means that such agreements are per se illegal, he wrote for the National Law Review.
