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March 14, 2022

DOJ and DOL to Cooperate on Antitrust Enforcement in Labor Markets

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Key Takeaways

  • The Department of Justice recently advanced its commitment to investigating and prosecuting anticompetitive conduct impacting labor markets by entering into a Memorandum of Understanding with the Department of Labor.
  • Learn more about what this partnership means and steps your organization can take now to ensure compliance with the antitrust laws.

On March 10, 2022, the Department of Justice (DOJ) advanced its commitment to investigating and prosecuting anticompetitive conduct impacting labor markets by entering into a Memorandum of Understanding (MOU) with the Department of Labor (DOL). The MOU is an agreement between the two agencies to collaborate in addressing anticompetitive conduct that harms workers "including through collusive behavior and the use of business models designed to evade legal accountability, such as the misclassification of employees." Id. Collusive behavior in the labor market and misclassification of workers have been priorities of the DOJ and DOL as of late. The MOU is likely to add an arrow to DOJ's enforcement quiver and lead to increased scrutiny of such conduct by both agencies.

The Memorandum of Agreement

According to Assistant Attorney General Jonathan Kanter of DOJ's Antitrust Division, "[b]y cooperating more closely with our colleagues in the Department of Labor, we can share enforcement information, collaborate on new policies, and ensure that workers are protected from collusion and unlawful employer behavior. Protecting the right of workers to earn a fair wage is core to the work of both our agencies, and it will continue to receive extraordinary vigilance from the Antitrust Division." 

The MOU (1) promotes information sharing between the agencies; (2) commits each agency to provide training and technical assistance to the other; (3) directs each agency to regularly consult and coordinate with one another regarding enforcement activities; and (4) encourages the DOJ and DOL to make referrals to the other agency when an investigation reveals misconduct within the subject-matter jurisdiction of the other agency.

The fact that the MOU is not merely an information sharing agreement but promotes referrals is particularly significant.1 This is likely to lead to both increased prosecution by the DOJ of anticompetitive conduct in the labor market and increased enforcement by the DOL of labor law violations, including purported misclassification. The MOU also calls for the DOJ to train DOL staff on "identifying cases and issues" related to anticompetitive conduct where appropriate.2 The MOU's training and technical assistance provision is likely to lead each agency to ultimately bring stronger cases and enforcement actions.

These provisions, in particular, have the potential to create a pipeline for case referrals to DOJ from the DOL for labor related violations of antitrust laws. Under the MOU, the DOJ is able to leverage the DOL staff's expertise in labor issues as well as the wealth of labor statistics it gathers.3

On the flip side, the MOU encourages the DOJ to refer cases to the DOL, such as cases where employers misclassify employees. On February 10, 2022, the DOJ weighed in on a National Labor Relations Board case concerning whether to clarify the definition of employee such that employees misclassified as independent contractors (i.e. "gig economy" workers) will be able to unionize without violating antitrust law. The DOJ filed an amicus curie brief that asserts that "[c]larity as to employee status is important, in part, because the antitrust laws otherwise scrutinize collective action among independent contractors or independent professionals, where they are not employees" and "leave affected workers with fewer tools to combat the exercise of monopsony power or superior bargaining leverage by employers." With DOJ on the lookout for labor-related antitrust violations, this could lead to an increase in referrals from DOJ to DOL as well. 

DOJ's Continued Focus on the Labor Market

The DOJ warned employers in its 2016 Antitrust Guidance for Human Resource Professions of its ability and intention to bring criminal charges against employers for agreeing to fix wages. It was not until 2020, however, that the DOJ brought its first criminal indictment related to anticompetitive conduct in the labor markets against the owner of a home healthcare staffing company, alleging that the defendant conspired with other staffing companies to artificially fix the wages of therapists providing in-home care. But since then, the DOJ has been on a roll. A string of criminal indictments alleging that defendant employers engaged in per se anticompetitive conduct in the labor market followed.4 Taken as a whole, these indictments have alleged that employers engaged in both labor market price fixing by colluding to fix the wages paid to workers, as well as illegal market allocation by entering into naked no-poach agreements with other employers. Most recently, on January 28, 2022, the DOJ indicted four managers of home healthcare agencies for both wage fixing and market allocation. According to Richard Powers, the DOJ's Antitrust Division's Deputy Assistant Attorney General for Criminal Enforcement, the DOJ "views rooting out collusion in labor markets to be part of its mission to deter, detect, and prosecute cartels more generally" and is "essential" to protect labor market competition.

Conclusion

The DOJ has demonstrated its commitment to investigating and prosecuting cases concerning competition in the labor market. The MOU allows the DOJ to not only take advantage of the data and expertise at the DOL, but creates an effective pipeline for the identification of potentially anticompetitive conduct. 

The DOJ's criminal prosecution of what it views as per se anticompetitive conduct in the labor market is very likely to increase because of the MOU. Accordingly, it is urgent that companies examine their relationships with their employees to ensure compliance with the antitrust laws. Employers should also review any agreements with competitors, vendors, or other employers regarding the solicitation or hiring of employees. Due to the increased scrutiny by the DOJ, employers should consult with counsel to ensure that these agreements cannot be construed as market allocation, which the DOJ would consider a per se violation.

Finally, companies that find themselves interacting with the DOL should be cognizant that DOL staff may be on the lookout for potential anticompetitive conduct in the labor market. The DOL, as a result of the MOU, will be better trained and equipped to identify anticompetitive conduct in the labor market. And, any anticompetitive conduct that comes to the attention of the DOL is likely to be referred to DOJ.

ALM expressly disclaims any express or implied warranty regarding the OnPractice Content, including any implied warranty that the OnPractice Content is accurate, has been corrected or is otherwise free from errors.

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