Trade Secrets & Employee Mobility

A Ruling and Order issued on April 28, 2023 by the U.S. District Court for the District of Connecticut in United States v. Patel, et al. ran the government’s losing streak to four failed trials seeking to criminally prosecute alleged wage-fixing and no-poach agreements. 

To review, in 2016 the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued Antitrust Guidance for Human Resources Professionals that warned of potential criminal prosecution for so-called “naked” no-poach agreements, i.e., agreements among competing businesses to restrict hiring or compensation of employees, untethered to any legitimate collaborative relationship. 

Within the last year, the U.S. Department of Justice (DOJ) brought its first indictments alleging criminal wage-fixing conspiracies and criminal no-poach conspiracies among competing employers.  In December 2020, DOJ indicted the president of a staffing company for violating Section 1 of the Sherman Act by allegedly conspiring with competitors to fix wages paid to physical therapists.  A month later, DOJ indicted a corporation for violating the Section 1 of the Sherman Act because it allegedly entered into “naked no-poach agreements,” pursuant to which it agreed not to solicit senior employees of two competitors   In March 2021, DOJ filed its second wage-fixing indictment, which also alleged a conspiracy to allocate workers.  As reported here and here, these indictments were the culmination of the DOJ’s Policy, contained in its 2016 Antitrust Guidance for Human Resource Professionals (“Antitrust Guidance”) to bring criminal charges against employers who conspired to suppress wages, either through wage-fixing agreements or naked no-poach agreements.

As readers of this blog know, no-poach and wage-fixing agreements are a current hot topic for both civil and criminal enforcement by the Antitrust Division of the Department of Justice.

Our colleague, Stuart M. Gerson has authored a helpful summary of recent history and what’s at stake regarding this topic, in an article published in Bloomberg Law: “No-Poaching Agreements, Wage-Fixing & Antitrust Prosecution.”

The following is an excerpt:

Especially in difficult economic times, companies look for stability and predictability. Hence, while intent upon avoiding ...

In the past month, the U.S. Department of Justice (DOJ) has made good on its 2016 threat, contained in its Antitrust Guidance for Human Resource Professionals (“Antitrust Guidance”) to bring criminal charges against people or corporations who enter into naked wage-fixing agreements or naked no-poach agreements.   First, as reported here, on December 9, 2020, DOJ obtained an indictment against the president of a staffing company who allegedly violated Section 1 of the Sherman Act by conspiring with competitors to “fix wages” paid to physical therapists (PT) and physical ...

Earlier this month, the U.S. Department of Justice (“DOJ”) announced that a federal grand jury in Texas indicted Neeraj Jindal, the former owner of a physical therapist staffing company, in connection with an illegal wage-fixing conspiracy to depress pay rates for physical therapists (“PTs”) and physical therapist assistants (“PTAs”) who travel to patients’ homes or assisted living facilities in the greater Dallas-Fort Worth area.  The indictment was something of a landmark for the U.S. Department of Justice (“DOJ”), which for years had promised that such ...