DOJ Brings First Criminal Charges for Collusion in Labor Markets
Client Alert | 2 min read | 12.11.20
Yesterday, the Antitrust Division of the Department of Justice announced its first criminal wage-fixing prosecution, charging the former owner of a Texas home health care staffing agency with violating Section 1 of the Sherman Act by participating in a conspiracy to suppress rates for physical therapists and physical therapy assistants.
Since October 2016, when it first released guidance on “no-poach” and wage-fixing agreements, the DOJ has repeatedly emphasized its intent to bring criminal charges for collusion in the labor and employment markets, but this is the first such action.
This indictment serves as a warning to all employers, not just those in the healthcare industry, that agreements with competitors limiting salary, benefits, or other terms of employment raise enormous antitrust risks, including substantial fines for companies and jail terms for individuals responsible for the conduct. Criminal prosecution of no-poach and wage-fixing agreements is a significant priority for the DOJ, and there are many open grand jury investigations into similar HR practices across a wide range of industries.
The defendant, Neeraj Jindal, the former owner of Integrity Home Therapy, is alleged to have agreed with a competing therapy staffing agency from March to August 2017 to reduce the rates paid by each company for physical therapists and physical therapy assistants. Jindal is also alleged to have separately reached out to four other competing agencies about collectively decreasing rates.
The two-count indictment also charges Jindal with obstruction of the Federal Trade Commission’s related investigation into the same underlying conduct, by making false and misleading statements, including in Investigational Hearings, and withholding relevant information in document productions.
In 2018, the FTC resolved an investigation into alleged violations of Section 5 of the FTC Act by Jindal and Your Therapy Source with a consent agreement prohibiting the respondents from entering into any agreement to lower, maintain, or stabilize compensation for employees and contractors and prohibiting the exchange of information related to compensation. Commissioner Chopra dissented from the final consent agreement in that matter because the penalties were not severe enough in light of the “unambiguous evidence that revealed a conspiracy to fix wages.” The indictment issued this week appears to address those concerns.
The DOJ’s action also serves as an important reminder for companies to ensure that their compliance programs are current, comprehensive, and effective, and ensure that employees responsible for HR activities are appropriately trained on the antitrust risks associated with HR practices.
Contacts
Insights
Client Alert | 7 min read | 08.16.24
Over the past several years, federal courts have increasingly questioned the authority of administrative law judges (ALJs) to adjudicate alleged violations of certain labor and employment statutes. In the last several weeks, two U.S. district courts in Texas issued decisions halting unfair labor practice proceedings before the National Labor Relations Board (NLRB) on the grounds that NLRB ALJs lack the constitutional authority to preside over such actions due to unconstitutional protections against their removal.[1] Similarly, the last year has seen several decisions by courts in the Fifth and Eleventh Circuits finding that ALJs, whose decisions are not reviewable by a Presidential appointee, lack constitutional authority under the Appointments Clause to adjudicate claims.[2] The trend illustrated by these decisions, combined with the Supreme Court’s decision in June to abandon the Chevron doctrine of extending deference to federal agency rule-making proceedings, portend significant changes in the way employers interact with federal agencies that enforce labor and employment law.
Client Alert | 2 min read | 08.15.24
Department of Defense Plans Increased Investment in Clean Energy
Client Alert | 7 min read | 08.15.24