Dive Brief:

• A group of 15 au pair agencies has agreed to pay $65,500,000 to resolve a lawsuit alleging they colluded to pay workers coming to the U.S. below federal and state minimum wages (Beltran, et al. v. Interexchange, Inc., et al., No. 14-cv-03074 (D. Colo. Jan. 9, 2019)).
• In the lawsuit, the au pairs said that the companies violated the Sherman Antitrust Act, which states that "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal"; that they violated the Fair Labor Standards Act (FLSA) by failing to pay federal minimum wage; and that they violated minimum-wage laws in several states.
• In addition to providing the money required by the settlement, the companies must give a statement to each host family when it enrolls in an au pair program that says the hosts and au pairs can agree to a compensation rate higher than the legal minimum, the court said. If the companies communicate with au pairs before they come to the U.S., they must provide this statement in English and in their native language. If the companies do not interact directly with the au pairs prior to their arrival, they must give the statement to the person or organization that recruits au pairs to forward to the individual prior to his or her arrival.

Dive Insight:

The FLSA is straightforward in prohibiting companies from paying employees less than federal, state and local laws mandate. The au pairs also claimed the agencies colluded to pay employees lower-than-legal wages — allegations that conjure relatively recent activity around wage-fixing agreements.

Last January, the federal government announced that it was looking at no-poaching and wage-fixing agreements. Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice (DOJ) reportedly told conference attendees that he was "shocked" about how many no-poach agreements and naked wage-fixing agreements exist. Employers make no-poach agreements when they agree not to recruit or hire each other's employees. And they make naked wage-fixing agreements when they agree to restrict wages and benefits that are not tied to a legitimate collaboration or joint ventures between companies. These arrangements, according to DOJ, restrain competition for employees and may constitute per se, or automatic, violations of antitrust laws.

For HR, this may trigger a couple of actions. HR professionals can assess hiring and compensation practices, looking to see if there are information exchanges or agreements with competing employers within an industry or labor market. HR teams should be briefed on what's legal and what's not concerning communication with competitors inside and outside an industry about salaries, benefits and other terms of employment. And when undergoing a merger or acquisition, HR personnel should consider how labor market competition could complicate compensation procedures during the transition.