Category: Business/ General Antitrust
Article: DOJ and FTC Set Possible Criminal Liability Trap for HR Professionals, Orrick, October 2016
Authors: James J.Tierney, David M. Goldstein, Alexander Okuliar
Late last year, in the waning days of the Obama Administration, the US DOJ and FTC published Antitrust Guidance for Human Resource Professionals that signaled a dramatic change of course by, for the first time, suggesting they would seek criminal penalties for certain hiring conduct involving human resource professionals. This action followed highly-publicized civil lawsuits brought by the DOJ in 2010 and 2011 alleging that agreements between high-level executives at seven high-tech companies and one digital animation studio not to solicit or hire each other’s employees were per se violations of the Sherman Act. Although the court never ruled on whether the agreements were subject to the per se rule, the DOJ’s assertion that such agreements could be condemned as per se unlawful left the door open for possible criminal enforcement. The DOJ and FTC walked through this open door with their October 2016 announcement that “naked” agreements not to solicit each other’s employees could result in criminal prosecution against individual human resource professionals, other company executives as well as the company. The DOJ’s dramatic change in policy is notable because no court has ever held that a non-solicit agreement is per se unlawful. Historically, the DOJ has been reluctant to criminally pursue anticompetitive agreements where there is uncertainty whether the courts will view the agreement as a per se violation. In any event, human resource professionals and counsel who support them are now on notice. They must look backward to ferret out any existing anticompetitive hiring agreements and look ahead to implement effective compliance procedures and prevent employees from entering into anticompetitive hiring agreements.