On April 3, 2018, the Department of Justice Antitrust Division (“DOJ” or “Antitrust Division”) filed an antitrust complaint against Knorr-Bremse AG (“Knorr”) and Westinghouse Air Brake Technologies Corporation (“Wabtec”) for agreeing not to “solicit, recruit, hire without prior approval, or otherwise compete for employees” (collectively, “no-poach agreements”). According to the complaint, Knorr and Wabtec are “each other’s top competitors for rail equipment used in freight and passenger rail applications” and also compete with each other to “attract, hire and retain various skilled employees, including rail industry project managers, engineers, sales executives, business unit heads, and corporate officers.”
As we reported in an earlier blog post, the Federal Trade Commission and Department of Justice issued guidance in the waning days of the Obama administration reminding HR professionals and others that the antitrust laws could apply in the employment arena, particularly with respect to hiring and compensation matters. There was some question about how vigorously the Trump Administration’s antitrust enforcement would be in this area, but those questions should no longer exist. 2018 is already turning out to likely be an important year regarding antitrust attacks on “no-poach” agreements between businesses, with a class being certified in a major damage action and the head of the Department of Justice Antitrust Division indicating last month that criminal indictments based upon such agreements would be shortly forthcoming. Executives and HR Departments should recognize the significant risks associated with express or implied agreements or “understandings”—or even “gentlemen’s agreements”—where businesses agree not to hire (or poach) each other’s employees or executives.
Last week the Federal Trade Commission and the Department of Justice jointly issued guidance to educate companies, and in particular human resource professionals, on how antitrust laws apply in the employment arena, particularly with respect to hiring and compensation matters. Human resource professionals should familiarize themselves with this guidance, which we summarize below, as the DOJ and FTC made it clear that HR professionals may be held individually responsible for certain employment-based antitrust violations.