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 criminal prosecutions were forthcoming in connection with its ongoing investigations of illegal no-poach and wage-fixing agreements by employers.
In October 2016, during the closing weeks of the Obama Administration, the DOJ and the Federal Trade Commission (“FTC”) issued a remarkable document, entitled Antitrust Guidance for Human Resources Professionals, which outlines an aggressive policy, promising to investigate and punish employers, and even individual Human Resources employees, who enter into unlawful agreements concerning recruitment or retention of employees. As stated in that document, “[a]n agreement among competing employers to limit or fix the terms of employment for potential hires may violate the antitrust laws if the agreement constrains individual firm decision-making with regard to wages, salaries or benefits; terms of employment; or even job opportunities.”
In the past four plus years, the Antitrust Division of the DOJ has announced on many occasions, via press releases, in congressional hearings or otherwise, that no-poaching and wage-fixing agreements among competing employers are an enforcement priority. The DOJ did bring one well-publicized civil suit regarding no-poaching, and filed some “statements of interest” in pending civil class actions. But it had filed no such criminal prosecutions – until December 9, 2020, when it secured the indictment of Mr. Jindal.
The indictment asserts two counts against Mr. Jindal: (1) an “antitrust conspiracy: price-fixing” violation of section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, and (2) obstruction of investigative proceedings before the FTC for making false and misleading statements and withholding information. The DOJ alleges that Mr. Jindal and his co-conspirators agreed to pay lower rates to certain PTs and PTAs, and that Mr. Jindal’s company did pay lower rates, from around March 2017 to around August 2017. The indictment describes numerous text messages to and from Mr. Jindal concerning the wage-fixing conspiracy.
The indictment of Mr. Jindal serves as a reminder to employers that the DOJ and FTC will not hesitate to challenge unlawful wage-fixing and no-poach agreements, anticompetitive non-compete agreements, and the unlawful exchange of competitively sensitive employee information, including salary, wages, benefits, and compensation data. Employers who are considering collaborating with others or making changes to their employee pay rates, policies and plans therefore would be wise to proceed with caution, keeping an eye on the antitrust laws and DOJ/FTC Guidance.