As U.S. Department of Justice Suffers Setbacks, New York Continues Crackdown on No-Poach Agreements

Seven years ago, in October 2016, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued joint guidance for human resource professionals, identifying certain employment practices that violate antitrust laws.1 The guidance addressed two specific types of hiring-related agreements that the agencies believed to unlawfully limit competition between employers to hire and recruit employees: wage-fixing and no-poach agreements. In wage-fixing agreements, companies set wages, benefits, or other employee compensation to agreed-upon levels or ranges. No-poach agreements arise when competitors agree not to solicit or hire employees from each other’s company.

As it warned, in the years following the issuance of the October 2016 guidance the DOJ has launched several criminal prosecutions against companies for their involvement with no-poach agreements. Despite the DOJ’s focus in this area and devotion of resources, those criminal prosecutions have been largely unsuccessful, with no guilty verdicts secured. In November 2023, the DOJ voluntarily dropped its last remaining criminal no-poach case.

As the DOJ reviews its position in light of its failed criminal prosecutions, it appears unlikely to abandon its efforts entirely. Public statements from the DOJ indicate that it will continue to evaluate bringing cases against companies involved with no-poach agreements, though such cases may steer more toward the enforcement of civil penalties.

The DOJ has not been alone in its attempts to rein in the use of no-poach agreements, as several state enforcement agencies have commenced investigations of their own. New York has been especially focused in this area. In late October 2023, the New York Attorney General’s Office (“NYAG”) announced a $4.5 million settlement with First American Financial Corporation, one of the nation’s largest title insurance companies, after a NYAG investigation discovered that First American entered into illegal no-poach agreements with several of its competitors, agreeing not to solicit each other’s employees.2

This settlement represents the latest chapter in the NYAG’s crusade against no-poach agreements, which has affected companies of all sizes including ski resorts in Central New York,3 home care companies in Brooklyn,4 and even some of the nation’s largest fast food restaurant chains.5 Other state attorneys general, as well as private litigants, also continue to challenge the use of no-poach agreements.6

What Are No-Poach Agreements?

A no-poach agreement is an agreement between or among employers not to solicit, recruit, or hire another’s employees. No-poach agreements sometimes appear as “no-recruiting,” “non-solicitation,” or “no-hire” agreements but, however structured, they have the same goal––limit competition between employers to hire and recruit employees.7 Antitrust regulators are suspicious of such agreements because they can depress or undercut wages and other job benefits.

No-poach agreements can be explicit or implicit, written or oral, and can take on many forms. Recent examples of challenged no-poach practices include circulating an internal do not call list of a competitor’s employees8 or competitors coordinating to use the same third-party intermediary (such as a recruiter) and directing it not to target each other’s employees.9

If you are uncertain whether an agreement or potential agreement may trigger scrutiny from state or federal antitrust enforcement agencies, please contact a member of the HSE Antitrust Law team.

1 For a prior LEGALcurrents installment on this joint antitrust guidance, see DOJ and FTC Issue Joint Antitrust Guidance on Employment Practices, HARTER SECREST & EMERY LLP (Nov. 2, 2016), [].

2 Attorney General James Secures $4.5 Million from Title Insurance Company for Harmful Labor Practices, OFFICE OF THE NEW YORK STATE ATTORNEY GENERAL (Oct. 27, 2023), [].

3 Attorney General James Takes Action Against Central New York Ski Resorts for Unfair and Illegal Practices, OFFICE OF THE NEW YORK STATE ATTORNEY GENERAL (Oct. 21, 2022), [].

4 Attorney General James Stops Home Care Company from Deceiving Patients and Caregivers, OFFICE OF THE NEW YORK STATE ATTORNEY GENERAL (Feb. 24, 2023), [].

5 Attorney General Letitia James Joins Multistate Settlement To Cease Fast Food Usage Of No-Poach Agreements, OFFICE OF THE NEW YORK STATE ATTORNEY GENERAL (Mar. 13, 2019), [].

6 Led by the New Jersey Attorney General, a group of attorneys general from 18 states and the District of Columbia recently filed an amicus brief in support of workers challenging a no-poach clause in a franchise agreement. AG Platkin: No-Poach Agreements Are Presumptively Illegal, STATE OF NEW JERSEY: DEPARTMENT OF LAW & PUBLIC SAFETY: OFFICE OF THE ATTORNEY GENERAL, [].

7 A non-solicitation covenant that an employer might have directly with an employee pursuant to an employment agreement is not viewed as a “no-poach” agreement.

8 See, e.g., Google, Apple In Anti-Trust Issue, CBS NEWS (Jan. 29, 2012), [].

9 Complaint at ¶ 11(c), United States of America v. Surgical Care Affiliates LLC, No. 3:21-cr-00011-L (N.D. Tex.).

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