The DOJ and FTC Issue Joint Statement on Competition in Labor Markets in Light of COVID-19: What Effect, If Any, Does This Have on Non-Competes?

On April 13, 2020, the Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition released a joint statement[1] and press release[2] regarding “competition in labor markets” and potential agency actions in the face of the COVID-19 crisis. While the agencies’ joint statement appears to be focused on collusion between employers entering into horizontal “no-hire” or “no-poach” agreements, employers in certain industries affected by the crisis should also exercise reasonable care in enforcing vertical restrictive covenants, including non-competition and non-solicitation agreements.

The DOJ’s enforcement of antitrust laws in the context of no-hire agreements between employers is, in and of itself, nothing new. Ever since the high-tech employee antitrust action against some of the nation’s largest tech firms in 2010, the DOJ has taken a more aggressive stance toward policing alleged collusion between employers to fix wages or not hire one another’s employees absent some legitimate justification (such as  two employers working jointly on a project involving the sharing of confidential information or a settlement in litigation of a raiding or non-solicitation claim). In October of 2016, the DOJ’s Antitrust Division announced that it intended to begin filing criminal actions against employers who entered into no-poach and wage-fixing agreements that are “naked”: per the DOJ’s description, agreements that are “unrelated or unnecessary to a larger legitimate collaboration between the employers.” And in January of 2018, the Antitrust Division re-affirmed that it intended to pursue criminal actions against employers using such agreements even if the agreements were entered into prior to 2016. While the DOJ has apparently yet to actually file any such criminal charges, DOJ attorneys informed Congress just last October[3] that there are a number of active criminal investigations underway.

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