In January of this year, our colleagues Janene Marasciullo and David Clark wrote about federal criminal indictments issued for naked wage-fixing and no-poach agreements. They warned that these federal indictments should serve as a cautionary tale for HR and other company executives. The Illinois Attorney General’s office recently reinforced that warning at the state level.
An Illinois court recently denied a motion to dismiss an action by the Illinois Attorney General’s Office–Antitrust Unit against a manufacturing company and three staffing agencies alleging that the company helped the staffing agencies enter into “unlawful agreements…to refuse to solicit or hire each other’s employees and to fix the wages paid to their employees,” which are respectively known as “no-poach” and “wage-fixing” agreements. In particular, the Illinois AG’s complaint alleges that the manufacturing company essentially served as the enforcer of the agencies’ agreement not to poach each other’s temporary employees that they assigned to the company, and that on multiple occasions the staffing agencies complained to the company about each other “cheating” on their no poach agreement—prompting the company to admonish the “cheating” parties. Most interestingly, in an ionic illustration of the axiom that (alleged) crime does not pay, the complaint alleges that the company and the agencies continued to adhere to the terms of their no-poach and wage-fixing agreements despite an inability to attract temporary employees because of the low wages offered due to the alleged wage-fixing.
This state-level case, together with the recent similar federal cases, demonstrates that governments are on the lookout for no-poach agreements.