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Wage Fixing Agreements Found to be Per Se Illegal. “No-Poach” Agreements Next?
In November 2021, for the first time, a Federal District Court in Texas held that wage fixing agreements were a per se violation of the Sherman Act that can be prosecuted criminally. The DOJ charged two employees at a Texas based staffing firm, for physical therapists and physical therapist assistants, with criminal wage fixing and conspiracy with another staffing firm. With this decision set, the focus now shifts to whether "no-poach" agreements can be prosecuted criminally as a per se violation of the Sherman Act.
Last January, the DOJ criminally prosecuted "no-poach agreements," when it announced that a Grand Jury indicted Surgical Care Affiliates LLC (SCA) for allegedly entering into agreements with two or more healthcare companies to not poach each of their senior level employees. In general, "no-poach" agreements involve an agreement with another company not to compete for each other's employees. SCA is facing a maximum penalty of up to $100 million in fines. This case is yet to be decided but the decision will shape the way the healthcare industry conducts business going forward.
Naked "no-poach" and wage fixing agreements are per se illegal because they eliminate competition. These agreements are "naked" if they are not reasonably necessary to any separate, legitimate business collaboration between the employers. These cases are only the tip of the iceberg as the Biden Administration has stated its intention to eliminate noncompete clauses and "no-poach" agreements that hinder the ability of employees to seek higher wages, better benefits, and working conditions by changing employers.
If you are in need of expert legal counsel regarding any DOJ Anti-Trust violation, do not hesitate to contact our knowledgeable and experienced attorneys at (212) 668-0200 or by email at email@example.com.