Four days before President Trump took office, the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) (together, “the Agencies”) under the Biden administration released their “Antitrust Guidelines for Business Activities Affecting Workers” (“The Guidelines”). These Guidelines replace and expand upon antitrust guidance for HR professionals that the Obama administration issued in 2016. The new Guidelines aim to clarify how the DOJ and FTC “identify and assess business practices affecting workers that may violate the antitrust laws.”
In particular, the new Guidelines address the following types of agreements and business practices as violations of antitrust law that may trigger civil penalties or criminal liability:
1. Wage-Fixing and No-Poach Agreements
Wage-Fixing Agreements: These are agreements between businesses (or between individuals of different businesses) to fix wages or other terms of compensation, such as benefits and bonuses. The Agencies say these agreements may be illegal even if they only set a range, ceiling, or benchmark for calculating wages without setting a specific wage.
No-Poach/No-Solicit Agreements: These are agreements between businesses (or between individuals of different businesses) to not recruit, solicit, or hire workers. This can include an agreement to request permission from the other company before trying to hire an employee. The Agencies say an agreement may be illegal even if it does not completely prohibit hiring the other company’s workers. For example, an agreement not to “cold call” workers is considered a no-poach agreement by the Agencies regardless of whether the businesses are allowed to hire the workers who applied for a position without first being solicited.
Notably, the Agencies continue to identify no-poach and non-solicit agreements as potentially per se criminal violations of the antitrust law even after DOJ suffered a series of stinging losses in criminal no-poach trials.[1]
2. No-Poach Agreements Between Franchisor and Franchisee
No-poach agreements in the franchise context occur when franchisors and franchisees agree to not compete for workers. The updated Guidelines expand on the no-poach agreements in the franchise context with the Agencies stating they may be illegal regardless of whether they actually harm workers. The Agencies note that a franchisor can also violate antitrust laws if it organizes or enforces a no-poach agreement among franchisees that compete for workers. Written and/or unwritten agreements between franchisees not to poach, hire, or solicit each other’s workers may also violate state laws, according to the Agencies.
3. Sharing Competitively Sensitive Information
According to the Agencies, sharing competitively sensitive information with your competitors, including terms and conditions of employment or compensation, may also violate the antitrust laws if the information exchange has (or is likely to have) anticompetitive effect. Discussing two hot areas of antitrust focus—information exchanges and algorithmic collusion—the Agencies also state that information exchanges can serve as evidence of a wage-fixing conspiracy, including information exchanges facilitated through an algorithm or some other third party, or can be unlawful. The Agencies go so far as to say that algorithms that generate wage recommendations may be unlawful even if businesses do not strictly adhere to those recommendations.
4. Non-Compete Clauses
The Guidelines say that non-compete clauses that restrict workers from switching jobs or starting a competing business can violate the antitrust laws. As we previously discussed, the FTC issued a rule banning most non-compete agreements, but a federal judge in Texas struck down that rule in July 2024. The Guidelines acknowledge that case, which is now on appeal, but reassert the FTC’s authority to address non-competes on a “case-by-case” basis.
5. Other Employment Conditions
The Agencies say they will also scrutinize any agreements that “impede worker mobility or otherwise undermine competition.” The Guidelines use the following as illustrative examples:
- Employee non-disclosure agreements
- Training repayment agreements
- Non-solicitation agreements with employees
- Exit fee and liquidated damages agreements
- False earnings claims by employers
Finally, the Guidelines emphasize that antitrust laws that protect employees also apply to independent contractors.
Will the Guidelines Have Staying Power in the new Administration?
Time will tell how the new Guidelines fare under the Trump Administration. On one hand, two Republican FTC Commissioners dissented from issuing the Guidelines—criticizing the timing “mere days before” the transition of power. On the other hand, the Obama administration’s 2016 guidelines survived the first Trump Administration. Previous Trump-appointed leaders of the DOJ Antitrust Division doubled down on the Guidance’s warning and brought the first criminal no-poach cases. The new Guidelines have already lasted a busy three weeks since the inauguration.
Given the continued antitrust focus on labor it remains wise for companies to:
- Review hiring and compensation practices that implicate the types of activities the Guidelines cover—especially practices involving no-poach agreements, non-competes, information sharing, or hiring restrictions.
- Review form or template agreements for employees and independent contractors to ensure compliance with antitrust laws.
- Watch this space to stay up-to-date on the Trump administration’s approach to antitrust guidance and enforcement.
FOOTNOTES
[1] Ruling and Order on Defendants’ Motions for Judgment of Acquittal, United States v. Patel, No. 3:21- cr-220 (D. Conn. Apr. 28, 2023), ECF No. 599.