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A Ruling and Order issued on April 28, 2023 by the U.S. District Court for the District of Connecticut in United States v. Patel, et al. ran the government’s losing streak to four failed trials seeking to criminally prosecute alleged wage-fixing and no-poach agreements. 

To review, in 2016 the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued Antitrust Guidance for Human Resources Professionals that warned of potential criminal prosecution for so-called “naked” no-poach agreements, i.e., agreements among competing businesses to restrict hiring or compensation of employees, untethered to any legitimate collaborative relationship. …

Continue Reading DOJ Fails Again in a No-Poach Prosecution

It is no secret that the Department of Justice (DOJ) has been largely unsuccessful in the criminal no poach cases it has brought to trial to date. Its most public loss came with the acquittals earlier this year of DaVita, a dialysis company, and certain of its executives in the District of Colorado. DOJ also lost at trial in another high-profile case in the Eastern District of Texas involving a physical therapy staffing company (although it secured a conviction against a company executive for obstruction of justice). But DOJ has pressed on, claiming victories at the motion to dismiss stage. Indeed, following its recent trial losses, Assistant Attorney General Jonathan Kanter, who leads the DOJ’s antitrust division, had this to say:
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Continue Reading DOJ Secures Its First No-Poach Win with a Guilty Plea by a Healthcare Staffing Firm

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…
Continue Reading Illinois Attorney General’s Office on the Lookout for Unlawful No-Poach Agreements

As reported here and here, in December 2019 and January 2020, the United States Department of Justice brought its first criminal charges against employers who entered into “naked” wage fixing agreements and no-poach (e.g., non-solicitation and/or non-hire)  agreements with competitors. According to DOJ’s 2016 Antitrust Guidance for HR Professionals, such agreements are “naked,” and, therefore, illegal per se, because they are “separate from or not reasonably related to a larger legitimate collaboration between competitors.”  Although DOJ recognized that such agreements may not be illegal per se when made in furtherance of legitimate joint…
Continue Reading The Pennsylvania Supreme Court Nixes a No-Poach Agreement Between Business Partners as Overbroad

In the past month, the U.S. Department of Justice (DOJ) has made good on its 2016 threat, contained in its Antitrust Guidance for Human Resource Professionals (“Antitrust Guidance”) to bring criminal charges against people or corporations who enter into naked wage-fixing agreements or naked no-poach agreements.   First, as reported here, on December 9, 2020, DOJ obtained an indictment against the president of a staffing company who allegedly violated Section 1 of the Sherman Act by conspiring with competitors to “fix wages” paid to physical therapists (PT) and physical therapist assistants (PTA).  Although not mentioned in the indictment, a related…
Continue Reading Less Than a Month After DOJ Brings Its First Wage-Fixing Indictment, DOJ Brings Its First “No-Poach” Indictment

The recently passed Act to Promote Keeping Workers in Maine is poised to dramatically alter the status of restrictive covenants in Maine.  The Act accomplishes this by: (1) prohibiting employers from entering into no-poach agreements with one another; (2) barring employers from entering into noncompetes with lower wage employees; (3) limiting employers’ ability to enforce noncompetes; (4) mandating advanced disclosure of noncompete obligations; and (5) imposing a time delay between when an employee agrees to the terms of a noncompete and when the noncompete obligations actually go into effect.  In addition to barring the enforcement of noncompliant noncompetes, the Act…
Continue Reading New Maine Law Bans No-Poach Agreements and Dramatically Limits Noncompetes

On March 12, 2019, Dunkin’ Donuts, Arby’s, Five Guys Burgers and Fries, and Little Caesars agreed to stop including “no-poach” clauses in their franchise agreements and no longer to enforce such clauses in existing agreements. A no-poach clause is an agreement between employers not to hire each other’s employees. The franchisors agreed to end this practice following an investigation by a coalition of attorneys general from 14 states into the use of no-poach clauses in fast food franchise agreements.[1] In a press release announcing the settlement, Maryland Attorney General Brian Frosh explained his concern “that no-poach provisions make it…
Continue Reading No-Poach Clauses in Franchise Agreements: Four More Franchisors Agree to Drop Them and the DOJ Weighs In on Class Actions Alleging Antitrust Violations

Tuesday, January 29, 2019
12:30 p.m. – 1:45 p.m. ET 

Issues arising from employees and information moving from one employer to another continue to proliferate and provide fertile ground for legislative action and judicial decisions. Many businesses increasingly feel that their trade secrets or client relationships are under attack by competitors—and even, potentially, by their own employees. Individual workers changing jobs may try to leverage their former employer’s proprietary information or relationships to improve their new employment prospects, or may simply be seeking to pursue their livelihood.

How can you put yourself in the best position to succeed in a …
Continue Reading Non-Compete and Trade Secrets Developments and Trends: A Year in Review and Looking Forward Webinar

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On Monday, attorneys general in eleven states, including New York, New Jersey, Massachusetts, California, and Illinois, revealed that they are investigating several prominent fast food franchisors for their potential use of no-poaching or non-compete agreements restricting the ability of low wage workers to obtain a better-paying job with another franchise. To that end, these attorneys general have propounded document and information requests to these restaurants, returnable August 6, 2018.

In the Illinois AG’s press release, Attorney General Madigan stated that “No-poach agreements trap workers in low-wage jobs and limit their ability to seek promotion into higher-paying positions within the same…
Continue Reading State Attorneys General Investigating Use of Non-Competes by Fast Food Franchisors

On April 3, 2018, the Department of Justice Antitrust Division (“DOJ”) announced that it had entered into a settlement with two of the world’s largest railroad equipment manufacturers resolving a lawsuit alleging the defendant employers had entered into unlawful “no-poach” agreements.  The DOJ’s Complaint, captioned U.S. v. Knorr-Bremse AG and Westinghouse Air Brake Technologies Corp., 18-cv-00747 (D. D.C.) alleges that three employers referred to as Knorr, Wabtec and Faively,[1] unlawfully promised one another “not to solicit, recruit, hire without approval, or otherwise compete for employees.”  It goes on to allege “[t]hese no-poach agreements denied American rail industry…
Continue Reading DOJ Antitrust Division Follows Through on Warnings Regarding Antitrust Scrutiny of Employer Non-Solicitation Agreements