Department of Justice Prosecuting Competitors Reaching Agreements Not to Recruit Each Other’s Employees as Illegal, Anti-Trust Behavior
Topics: Non-Compete and Trade Secrets
Yesterday, the Department of Justice, probably for the first time since 2010, commenced and settled anti-trust proceedings against employers who had reached agreements not to poach each others’ employees. In 2010, the Department of Justice commenced and settled anti-trust actions against Adobe, Apple, Google, Pixar, Intel, and Intuit arising from defendants’ agreements not to recruit each other’s employees which eliminated competition and depressed compensation to the employees. The judgment enjoined the parties from entering into further agreements or restraining efforts to recruit or solicit the employees of competitors for five years. In 2013, a class action civil case was filed against, essentially the same defendants, alleging violations of California’s antitrust statute, and right to compete law. By 2015, the Court approved over $400 million in settlements for the certified class of 65,000 employees.
United States of America v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation, Case No. 1:18-cv-00747, filed in the United States District Court for the District of Columbia yesterday, alleged that the defendant employers, the world’s largest rail equipment suppliers, had entered into a series of unlawful agreements not to poach each other’s employees in violation of the Sherman Act, alongside a Stipulated proposed Judgment reflecting settlement with the employers. The Stipulated proposed Judgment will enjoin the employers from enforcing or entering into no-poach agreements, take compliance measures and cooperate with any subsequent investigation or litigation but had no financial component. However, the settlement is not a bar to any private right of action that individuals might bring.
Employers must be cautious about any conversations or agreements with competitors that might be construed as anti-competitive activity. An employee’s private right of action under the Sherman Act or California’s antitrust laws include potential treble damages.