The Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) recently issued updated guidelines regarding antitrust issues implicated by certain kinds of agreements impacting employees and labor markets.
The new guidelines discuss how certain agreements, which limit the ability and freedom of workers to change jobs, or which amount to collusive combinations with other businesses to dictate hiring and compensation terms and conditions, can create both civil and criminal liability under antitrust laws.
NEW GUIDELINES
On January 16, 2025, the FTC and DOJ jointly issued Antitrust Guidelines for Business Activities Affecting Workers (the “2025 Guidelines”) replacing the 2016 jointly issued Antitrust Guidance for Human Resources Professionals (the “2016 Guidelines”). The 2016 Guidelines focused on non-hire agreements, in which employers agree not to recruit certain employees or not to compete with respect to compensation. The 2025 guidelines set forth a broader range of collusive activity between businesses that could put them under the antitrust enforcement microscope. At the end of the day, however, the bottom line is the same: agreements which limit mobility of workers and businesses in labor markets can create civil and criminal antitrust violations.
The 2025 Guidelines set out five specific, albeit non-exhaustive, examples of enforcement focus:
- Agreements not to recruit, solicit, or hire workers, or to fix wages or terms of employment.
- Franchise agreements that contain agreements not to poach, hire, or solicit employees of the franchisor or franchisee.
- Exchanges of competitively sensitive information between companies that compete for workers.
- Terms of employment agreements that restrict worker freedom to leave a job.
- Other “restrictive, exclusionary or predatory” terms of employment that “harm competition.”
The 2025 Guidelines then stress that an “agreement” does not require a writing or other explicit evidence – “conspiracies, gentlemen’s agreements, handshake agreements, or shared or mutual understandings” can all violate the antitrust laws – whether express or implied and whether “talked about at all” and “even if they are never carried out.” In other words, it is the mere fact of the agreement that violates the law, and what happens after the agreement is made does not change the business’s culpability.
It is important to keep in mind that the competition market involved in these guidelines is the labor market – not the competition for sales or customers. Businesses that do not compete with each other as to industry may still need the same kind of worker – like an engineer or IT professional. Limiting employees’ mobility via agreements not to compete for their talents or by implementing terms of employment that make it hard if not impossible to change jobs are looked at through the same antitrust lens.
The 2025 Guidance also provides extensive citation to case law and other matters that illustrate the mandates therein. In addition, the 2025 Guidance adds two other items to the focal list:
- Agreements reached between businesses and independent contractors.
- False claims about potential earnings.
In the discussion of independent contractors, the 2025 Guidelines specifically mention “platform businesses” such as smartphone apps where businesses hire independent contractors and not employees. If two businesses in need of independent contract workers agree to fix the compensation of those workers who offer their services via the platforms, the result “may constitute the type of per se violation of the antitrust laws that the (sic) exposes the platforms to criminal liability.”
As to the “false claims” example, the 2025 Guidelines note that the FTC has taken actions against at least four different businesses for “allegedly advertising that workers would earn substantially more in compensation and/or tips” than they actually did. The businesses in the examples include Amazon, Uber and Grubhub.
Finally, the 2025 Guidelines include a how-to-report-violations catalog of methods is presented, online and via mail, as is a list of the type of information the agencies would like to see in those complaints. The desired information is what one would expect – names of businesses, individuals, examples of anticompetitive conduct, who may have been harmed, and how the complainant came to learn of the reported information.
CONCLUSION
Although the 2025 Guidelines do not contain anything substantively earth-shattering, enforcement agencies are clearly implementing an expanded lens of scrutiny. Protecting worker freedom was a hallmark focus of the Biden Administration, but these new guidelines were passed on only a 3-2 vote. How they fare as an enforcement priority as the second Trump Administration takes shape remains to be seen, but businesses and their HR professionals should understand that no matter what the political winds might bring, many of these activities can trigger criminal prosecution and serious consequences under antitrust laws.
