How HR Executives Go to Jail: No-Poaching Agreements with Competitors

There are several reasons that wages are stagnating. One likely reason is that large employers secretly agree not to poach each other's employees.

And now, the U.S. Justice Department (DOJ) is using the criminal provisions of the Sherman Antitrust Act to hold executives responsible for this illegal practice.

Obama Example #1 involves two large companies that manufacture brakes for trains. The Obama DOJ alleged that Wabtec and Knorr-Bremse agreed not to hire many of each other’s senior employees in 2009. That included project managers, engineers, corporate officers and sales workers, according to the DOJ. The Obama DOJ broke that practice without jailing anyone.

Obama Example #2: Large Detroit medical centers agreed among themselves not to hire nurses, doctors, and all other employees from each other. This not only tamped down pay for specialists but for hourly wage earners. The Obama DOJ broke that practice without jailing anyone.

Now comes this new stance from the Trump DOJ (quoting from New York Law Journal’s recent reporting):

“In January 2018, the new head of the Antitrust Division—Assistant Attorney General Makan Delrahim—publicly stated that the Division has several ongoing no-poach investigations and would soon be bringing enforcement actions in these investigations: “In the coming couple of months, you will see some announcements, and to be honest with you, I’ve been shocked about how many of these [no-poach agreements] there are, but they’re real.” This warning followed public remarks by the Antitrust Division’s second-in-command—Principal Deputy Assistant Attorney General Andrew Finch—late last year indicating that companies and their executives “should be on notice” that they could be criminally prosecuted for participating in no-poach or wage-fixing agreements regardless of whether they compete to sell the same products or services.”