ILMA Compoundings December 2016 - 25


RULES & REGS

1 in 5 American employees
is constrained by a postemployment noncompete and
nearly 15 percent of those
individuals are making less
than $40,000 per year.
Overall, the Obama administration wants states to eliminate
or significantly reduce the use of noncompetes for many
employees in a variety of industry sectors.

Human Resource Guidance

behavior relative to potential employees. It is important to
remember that the DOJAD can initiate a criminal prosecution
and/or a civil action in conjunction with the FTC against an
employer.
Additionally, any employee or employer could also initiate
a private civil cause of action and may seek treble damages
(e.g., three times the damages actually suffered) if they were
harmed by the unlawful hiring agreement. Given those serious
ramifications, it may be advisable to examine your hiring
practices with your local counsel.

Bryant serves as regulatory counsel to ILMA through Bassman,
Mitchell, Alfano & Leiter Chtd. He may be reached at 202-386-7670
or dbryant@bmalaw.net.

The DOJAD and the FTC also have published guidance for
human resource personnel (given their proximity to hiring
practices) to assist in identifying and reporting anti-competitive
behavior, such as agreements among employers not to
compete for certain employees.
The DOJAD and FTC argue in the guidance that "increased
market concentration of firms can also facilitate collusive
agreements that allow small number of employers, who
compete over the same workforce, to artificially suppress
wages below market rates or agree not to hire one another's
employees." DOJAD and FTC are concerned that, like price
fixing, this type of employer collusion is counter to U.S. antitrust
laws and the competitive environment those laws seek to foster.
The memo highlights as an example a recent enforcement
action involving a $415 million settlement implicating eight
Silicon Valley employers who agreed not to "poach" each other's
employees in an effort to drive down wages and benefits for
computer engineers and programmers. Both federal agencies
are concerned that those types of anticompetitive agreements
occur in a variety of industry sectors, and they will likely take
more enforcement actions to prevent those agreements going
forward.
What will come of the Obama administration's call to action on
the state level remains to be seen, as it is primarily incumbent
upon the states to take independent action to pass legislation
or regulations to restrict the use of noncompetes. However, it
is apparent that FTC and DOJAD intend to pursue enforcement
actions against employers for engaging in anticompetitive

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Compoundings December 2016 * 25 * Vol. 66 No. 12
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Table of Contents for the Digital Edition of ILMA Compoundings December 2016
