Skip to Main Content

Keeping you informed

Implications of the Justice Department's Latest Defeat in No-Poach Trial

    Client Alerts
  • May 05, 2023

Previously relegated to purely civil enforcement, in the last year the U.S. Department of Justice (DOJ) has increased its focus on pursuing criminal charges for anti-poach agreements between companies that attempt to unreasonably restrict the recruitment and hire of their employees. On April 28, a federal court in Connecticut dismissed criminal antitrust claims against six staffing company executives in the midst of a high-profile trial. The DOJ alleged that the defendants conspired to fix wages or restrict recruitment and hiring among the staffing companies servicing Raytheon’s Pratt & Whitney division. The court held that no reasonable juror could conclude there was a “cessation of ‘meaningful competition’ in the allocated market.” The court reasoned that workers were still able to switch between staffing companies and that the alleged conspiracy had “so many exceptions that it could not be said to meaningfully allocate the labor market of engineers from the supplier companies.”

The DOJ’s defeat comes on the heels of multiple setbacks in its push against alleged price-fixing and no-poach agreements. In April 2022, a Texas jury rejected most charges in a wage-fixing case against the former owner and clinical director of a physical therapist staffing company. Just a day later, a Colorado jury acquitted DaVita Inc. and its former CEO of allegedly conspiring to suppress competition in the market for workers. Then, in March 2023, a Maine jury acquitted four home health agency executives of conspiring to fix caretakers’ wages. Ultimately, despite its aggressive push, the DOJ has secured only two guilty pleas and has otherwise piled up a streak of losses that endanger its agenda.

Despite early failures at enforcing criminal penalties for anti-poach agreements, businesses should exercise heightened caution when forming any agreement with a competitor – especially one that could be viewed to restrict movement of employees. Not only are these agreements targets for civil litigation claims, but the DOJ will continue to look for other instances in which to bring civil – or criminal – enforcement actions for agreements that the DOJ views as an unreasonable restraint of trade.