FTC and Justice Department Issue Guidance Regarding Hiring and Compensation Decisions

 
Friday, November 4, 2016
 
The Federal Trade Commission and the Justice Department’s Antitrust Division issued guidance for human resource (HR) professionals and others who are involved in hiring and compensation decisions. The law and the guidance will help educate and inform them about how the antitrust laws apply to the employment arena. (https://www.ftc.gov/system/files/documents/public_statements/992623/ftc-doj_hr_guidance_final_10-20-16.pdf)

Workers are entitled to the benefits of a competitive market for their services. They are harmed if companies that would ordinarily compete against each other to recruit and retain employees agree to fix wages or other terms of employment or enter into so-called “no-poaching” agreements by agreeing not to recruit each other’s employees.

Going forward, the Justice Department intends to criminally investigate naked no-poaching or wage-fixing agreements that are unrelated or unnecessary to a larger legitimate collaboration between the employers. These types of agreements eliminate competition in the same way as agreements to fix the prices of goods or allocate customers, which have traditionally been criminally investigated and prosecuted as hardcore cartel conduct. Agreements that do not constitute criminal violations may still lead to civil liability under statutes enforced by both agencies.

The guidance also discusses how the antitrust laws apply to firms’ decisions to share sensitive information, such as compensation information, with competing employers, either directly or through third party entities. Information sharing may violate antitrust law unless the information exchange is carefully designed to prevent harm to competition.

The agencies’ joint guidance includes a Q&A section that explains how antitrust law applies to various scenarios that HR professionals might encounter in their daily work lives. The agencies also urge HR professionals and others who have information about possible antitrust violations to contact the Federal Trade Commission’s Bureau of Competition or the Justice Department Antitrust Division’s Citizen Complaint Center.

The agencies have also issued a quick reference card (https://www.ftc.gov/system/files/documents/public_statements/992623/ftc-doj_hr_red_flags.pdf) that encapsulates some of this information in a convenient, index-card-sized format. The card provides a list of antitrust red flags that HR professionals should look out for during their day-to-day work. The listed situations are not exhaustive, and the existence of a red flag does not necessarily imply an antitrust violation. Still, HR professionals should proceed with particular caution if they are confronted with any of the scenarios listed on the card. By doing so, HR professionals can play an important role in protecting employees and consumers and ensuring the competitiveness of the employment marketplace.
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