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The Department of Justice (DOJ) Antitrust Division has obtained its first criminal indictment based on an illegal conspiracy between two companies that agreed not to solicit each other’s employees a so-called “no-poach” agreement. This marks a significant milestone although the Antitrust Division has warned since 2016 that it would begin criminally prosecuting unlawful no-poach agreements, it has taken only civil action, until now. On January 7, 2021, the Division announced that Surgical Care Affiliates LLC (SCA), a surgical outpatient services company, had been charged with violating the federal antitrust laws for agreeing with its competitors not to solicit and hire each other’s senior-level employees.
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On January 7, 2021, the Antitrust Division of the U.S. Department of Justice announced a two-count indictment of Surgical Care Affiliates LLC (“SCA”), which owns and operates outpatient medical care centers across the country.
The two-count indictment, filed in the U.S. District Court for the Northern District of Texas, charges SCA with entering into two conspiracies in violation of Section 1 of the Sherman Act. The indictment alleges that the first conspiracy between SCA and a company based in Texas occurred between May 2010 and October 2017 and was an agreement not to solicit each other’s senior level employees. The indictment also alleges a conspiracy that began in February 2012 and ran through July 2017 between SCA and a company in Colorado to allocate senior level employees through a non-solicitation agreement.
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In 2016, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued Joint Guidance for Human Resource Professionals warning that no-poach agreements restricting employee hiring may violate the antitrust laws.[1] That guidance, along with pre-guidance litigation, has established some clear ground rules. Naked no-poach agreements are per se illegal under §1 of the Sherman Act,[2] while ancillary no-poach agreements, those related to legitimate, procompetitive joint ventures[3] and corporate acquisitions,[4] are subject to the rule of reason, which considers whether the agreement is, on balance, anticompetitive.
Yet, four years later, there remain stubborn pockets of disagreement for example, no-poach clauses in franchise agreements. Federal courts are struggling to reach a consensus on how to analyze them under the antitrust laws. And there’s a lot at stake. Statistics show more than 8 million American
Tuesday, December 29, 2020
Earlier this month, the U.S. Department of Justice (“DOJ”) announced that a federal grand jury in Texas indicted Neeraj Jindal, the former owner of a physical therapist staffing company, in connection with an illegal wage-fixing conspiracy to depress pay rates for physical therapists (“PTs”) and physical therapist assistants (“PTAs”) who travel to patients’ homes or assisted living facilities in the greater Dallas-Fort Worth area. The indictment was something of a landmark for the U.S. Department of Justice (“DOJ”), which for years had promised that such criminal prosecutions were forthcoming in connection with its ongoing investigations of illegal no-poach and wage-fixing agreements by employers.
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The Antitrust Division of the Department of Justice (“DOJ”) recently announced its first-ever criminal wage-fixing prosecution. The DOJ likely intends this case to be a wake-up call to companies, executives, and HR professionals, reinforcing that competition laws apply equally to wages paid to employees as they do to prices for goods and services. Companies and individuals should take note of this development, update their trainings and compliance programs as appropriate, and recognize that wage fixing could lead to federal criminal prosecution and even jail time.
The Facts
On December 10, 2020, the DOJ announced that a federal grand jury indicted the former owner of a therapist staffing company for participating in a wage-fixing conspiracy. The indictment alleges that Neeraj Jindal and his co-conspirators agreed to fix prices by lowering rates paid to healthcare workers. For approximately five months in 2017, accord