The Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) recently issued a strong warning to HR professionals: certain agreements to fix salaries or limit competition could result in criminal and civil penalties. The guidance is the first to address exchanges of salary and benefit information in decades, yet it comes as no surprise, due to a number of recent investigations of corporate employment agreements.

Wage-Fixing and No-Poaching
The guidance warns against two practices in particular, naked wage-fixing and no-poaching agreements, as per se illegal under the antitrust laws. Wage-fixing involves agreements or understandings between competitors to set or limit employee salary or benefits. No-poaching involves agreements to refuse to solicit or hire another company's employees. It should be noted that when a practice is per se illegal, the government will not inquire into the competitive impact of the arrangement. Rather, the DOJ will now proceed criminally against these wage-fixing and no-poaching agreements. The DOJ's position is that these types of agreements "eliminate competition in the same irredeemable way as agreements to fix product prices or allocate customers, which have traditionally been criminally investigated and prosecuted as hardcore cartel conduct." If an investigation into a company's HR policies reveals a naked wage-fixing or no-poaching agreement, the DOJ might bring felony charges against the culpable individuals and companies.