Key takeaways

The new guidelines echo the major points of the 2016 guidelines, such as:

• Wage-Fixing and No-Poach Agreements: Agreements fixing workers' wages and benefits and agreements not to hire or solicit from other companies are per se illegal and therefore subject to criminal prosecution or civil liability. The new guidelines make clear that agreements to set a wage ceiling or benchmark are per se illegal.
• Sharing Competitively Sensitive Information: Sharing non-public information with competitors, including wage and benefit information or other terms and conditions of employment, may violate the antitrust laws. However, the new guidelines take a stronger stance against sharing information through use of a third party, including through use of an algorithm or other software tool. The previous guidelines had indicated information sharing could be lawful if a neutral third party managed the exchange. Now, it is clear that the regulators are scrutinizing the use of emerging technology to facilitate improper information exchanges. Companies should proceed with caution when working with or sharing information with competitors, especially considering the recent withdrawal of the Competitor Collaboration guidelines.²
• Competitors in the Labor Market: Companies can compete to hire or retain workers even if they produce different products or offer different services. The antitrust agencies focus on whether companies compete for the same talent. The new guidelines clarify that companies can be labor market competitors even if they have a collaborative or cooperative relationship, such as a joint venture or a supplier relationship. It is critical for companies to properly train their employees to ensure they understand that any company can potentially be a competitor when it comes to antitrust labor violations. The new guidelines give the example of airplane manufacturers and their part suppliers as both potentially hiring from the same market for engineers.

However, the new guidelines flesh out points that were not in the 2016 guidelines:

• No-Poach Agreements in the Franchise Context: Franchisors can compete with franchisees for workers, and agreements between franchisors and franchisees not to compete for workers can be per se illegal under antitrust laws. Additionally, franchisors may violate antitrust laws by organizing or enforcing no-poach agreements among franchisees.
• Individual Employee Non-Competes: Non-compete clauses, which restrict workers from switching jobs or starting a competing business, can harm competition by preventing workers from pursuing better employment opportunities and by limiting other companies’ ability to hire the necessary talent to compete effectively. The antitrust agencies may investigate and take action to invalidate non-competes and other labor restrictions that limit worker mobility.
• Other Harmful Labor Restraints: Other labor restraints may violate antitrust laws, including NDAs, training repayment agreements, and exit fee or liquidated damages provisions. NDAs have been a focus of antitrust enforcers recently.³ This is a clear change from the 2016 guidelines, which explicitly noted they did not address the legality of specific terms in contracts between an employer and employee.
• Independent Contractors: Antitrust laws apply to agreements involving independent contractors, including companies that use smartphones or other similar platforms to hire independent contractors. Agreements between companies to fix the compensation of independent contractors or to restrict their ability to work for other companies can violate antitrust laws. This has been a recent focus of the FTC, as they recently indicated that the antitrust exemption for collective bargaining and unions also applies to independent contractors and gig workers.⁴

In depth

The 2016 guidelines were primarily aimed at alerting HR professionals to potential antitrust violations in hiring practices. In contrast, the new guidelines are broader, addressing how the antitrust agencies will assess business practices affecting workers at large. The new guidelines also establish that agreements between an employer and an employee, and not merely agreements between labor market competitors, may violate antitrust laws.

The new guidelines clarify that antitrust laws apply to companies that use smartphone apps or similar platforms to hire independent contractors. The new guidelines’ focus on independent contractors and the gig economy is consistent with the FTC’s recently released policy statement on Exemption of Protected Labor Activity by Workers from Antitrust Liability. The FTC's statement clarified that the labor exemption of the Clayton and Norris-LaGuardia acts, which protect workers ability to organize and collectively bargain, also applies to independent contractors.

Additionally, the new guidelines now contain a section on false earning claims. Although these types of claims are not an antitrust issue, the guidelines state that the antitrust agencies can investigate companies that make misleading claims about potential earnings for both employees and independent contractors. When employers, including gig platforms, advertise that employees will receive significantly higher compensation and/or tips than they actually do, the FTC can pursue legal false advertising claims.

The new guidelines underscore that vibrant competition among employers is good for workers by providing better wages, benefits, and other terms and conditions of employment. They also note that companies should be free to hire the right person for a job, and that open markets to recruit and retain workers create opportunities for new business formation, innovation, and productivity.

Commissioner Andrew Ferguson, who President Trump has tapped to be the next FTC Chair, wrote a dissenting statement, which was joined by Commissioner Melissa Holyoak. Commissioner Ferguson, who has been critical of the agencies flurry of post-election announcements and updates made by the Biden-Harris administration, stated, “the Biden-Harris FTC announcing its views on how to comply with the antitrust laws in the future is a senseless waste of Commission resources. The Biden-Harris FTC has no future.” This statement calls into question the longevity of the new guidelines under the Trump administration.

Conclusion

Companies must remain vigilant regarding their hiring and employment practices—including those of independent contractors, temporary workers, and freelancers—to ensure compliance with antitrust laws. The new guidelines underscore the importance of fair competition in the labor market. They make clear that not only can agreements between competitors in a labor market violate antitrust laws, but restrictions between employers and employees that prevent workers from pursuing other jobs may also violate antitrust laws.

By adhering to these guidelines, companies can foster a competitive environment that benefits both employers and workers, leading to better wages, benefits, and overall terms of employment for workers.

It is crucial for companies to regularly train their employees and review their employment practices to avoid legal repercussions and promote a healthy and dynamic labor market.

1 Antitrust Guidelines for Business Activities Affecting Workers.

2 See our client alert on the withdrawal of the Guidelines for Collaborations Among Competitors here.

3 DOJ and OSHA put out a joint statement on NDAs last week. See our alert on it here.

4 FTC Issues Policy Statement Clarifying that Independent Contractors, Gig Workers’ Organizing Activities Are Shielded from Antitrust Liability.