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Home | BakerHostetler

Jonathan Forster Earns Washingtonian Top Financial Adviser Nod

Department of Justice and Federal Trade Commission Release Guidelines on Business Practices That Impact Workers

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Only days before the presidential inauguration, the Department of Justice (DOJ) and Federal Trade Commission (FTC) released updated Antitrust Guidelines for Business Activities Affecting Workers (the 2025 Guidelines).

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The 2025 Guidelines replace the Agencies’ 2016 Antitrust Guidance for Human Resource Professionals (2016 Guidelines), which announced, among other things, that the DOJ intended to pursue criminal charges for certain no-poach agreements concerning employees. While the 2025 Guidelines continue and expand on the 2016 Guidelines, they also depart in some ways.&nbsp;

Coming at the tail end of the Biden-Harris administration, it remains to be seen whether the 2025 Guidelines will play a significant role in the Trump administration. Certain policies in the 2016 Guidelines found favor with the last Trump administration, such as investigating and prosecuting certain no-poach and wage-fixing agreements as criminal investigations, and may remain priorities for the DOJ and FTC going forward. Others may not. Regardless, there is likely to be continued interest in applying the antitrust laws to certain conduct in the labor markets.

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On January 16, 2025, in the waning hours of the Biden-Harris administration, the Department of Justice (DOJ) and Federal Trade Commission (FTC) jointly released their “<a href="https://www.ftc.gov/system/files/ftc_gov/pdf/p251201antitrustguidelinesbusinessactivitiesaffectingworkers2025.pdf" target="_blank" rel="noreferrer noopener">Antitrust Guidelines for Business Activities Affecting Workers</a>” (2025 Guidelines). The 2025 Guidelines, which replace and significantly expand the prior guidance issued by the outgoing Obama-Biden administration in 2016, purport to explain “how [the Agencies] assess whether business practices affecting workers violate the antitrust laws.” FTC Commissioners Andrew N. Ferguson and Melissa Holyoak <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/at-guidelines-for-business-activities-affecting-workers-ferguson-holyoak-dissent.pdf" target="_blank" rel="noreferrer noopener">dissented to the 2025 Guidelines</a>. Ferguson, then a Commissioner and now Chairman of the FTC under the Trump administration, wrote: “[T]he lame-duck Biden-Harris FTC should not replace existing guidance mere days before they hand over the baton. That is not ‘running through the tape.’ Rather, the Biden Harris FTC announcing its views on how to comply with the antitrust laws in the future is a senseless waste of Commission resources. The Biden-Harris FTC has no future.”

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Among other things, the 2025 Guidelines express the Agencies’ current views that:&nbsp;

Agreements between companies not to recruit, solicit or hire workers, or to fix wages or other terms of employment, may expose companies and executives to criminal liability;

Agreements in the franchise context to not hire, solicit or poach employees, even between franchisor and franchisee, may constitute per se violations of the antitrust laws;

Sharing competitively sensitive information about workers may violate the antitrust laws – even if shared via a “third party or intermediary” or algorithm;

Non-compete, non-disclosure, and other agreements that allegedly “restrict workers’ freedom to leave their job” may violate the antitrust laws; and &nbsp;

Overly broad non-disclosure agreements, training repayment agreement provisions, non-solicitation agreements, and exit fee or liquidated damages provisions that the Agencies believe are restrictive, exclusionary or predatory employment conditions may harm competition and violate the antitrust laws.

Importantly, the DOJ and FTC take a broad view of labor market competition and expand the scope of agreements that may have antitrust implications. The 2025 Guidelines state: “Companies can be labor market competitors even if they have some other collaborative or cooperative relationship, such as a joint venture . . . Companies can also be competitors in a labor market even if they are not competitors in downstream markets to produce a good or service.” In short, labor markets do not always align perfectly with the markets they service.

No-poach, no-hire and wage-fixing agreements:

The 2025 Guidelines state that certain types of agreements, including no-hire and non-solicit agreements (defined by the Agencies as “no poach”), as well as wage-fixing agreements, may violate the antitrust laws and be subject to criminal liability. Even agreements to “stabilize,” “align,” or “otherwise coordinate the wages they set” can violate the antitrust laws and lead to criminal liability. The Agencies also assert “it does not matter if the agreement does not completely prohibit hiring the other company’s workers”; even agreements to restrict hiring, for example through restrictions on solicitations, are problematic. According to the 2025 Guidelines, such agreements are “illegal even if they did not result in actual harm such as lower wages.”&nbsp;

The 2025 Guidelines reiterate the DOJ’s continued interest in criminal prosecution for certain labor market investigations. However, DOJ’s record in these cases is poor. Since 2022, it has litigated four cases through trial and lost all of them.

Franchise no-poach agreements:

New to the 2025 Guidelines is a discussion of no-poach agreements in the franchise context. The DOJ and FTC offer precious few details about their views on franchise relationships, other than to warn that agreements between franchisors and franchisees not to compete for workers may be per se illegal under the antitrust laws. The Agencies’ interest in franchise no-poach agreements is noteworthy because, apart from statements of interest and amicus briefs filed in private class action cases, government enforcement in the franchise context has chiefly played out at the state level. The Washington Attorney General, in particular, has filed many franchise-antitrust cases in the past decade, resulting in settlements requiring the removal of no-poach provisions from franchise agreements.

The Agencies’ reference to the draconian per se standard is notable given that several courts have concluded that agreements between franchisors and franchisees are “ancillary” to otherwise valid, procompetitive franchise agreements. As such, those courts have analyzed those agreements under the more permissive rule-of-reason standard, meaning they may be defensible as promoting competition, rather than lacking in any redeeming value under the per se rule.

Sharing of competitively sensitive employment information:

The 2025 Guidelines state that exchanging competitively sensitive information with competitors about the terms and conditions of employment may violate the antitrust laws if the exchange “has, or is likely to have, an anticompetitive effect, whether or not that effect was intended.” The 2025 Guidelines elaborate that information exchanges may be illegal under the antitrust laws even if the exchange is not direct; rather, “sharing competitively sensitive information through a third party, algorithm, tool or product may also be unlawful.” They continue: “Information exchanges facilitated by and through a third party (including through an algorithm or other software) that are used to generate wage or other benefit recommendations can be unlawful even if the exchange does not require businesses to strictly adhere to those recommendations” and “even where co-conspirators retain some discretion or cheat on the agreement.”

This is a significant departure from the Agencies’ 2016 Guidelines. The 2016 Guidelines provided a list of factors useful for minimizing the risks of exchanging competitively sensitive information: (i) a neutral third party manages the exchange, (ii) the exchange involves information that is relatively old, (iii) the information is aggregated to maintain data anonymity, and (iv) enough sources are aggregated to prevent disaggregating the data and attributing it to specific employers. These factors are not mentioned in the 2025 Guidelines, reflecting the Agencies’ developing skepticism about information exchanges, as reflected in their 2023 withdrawal of health care policy statements from which these factors were drawn.

Non-compete clauses and other employer-employee agreements:

Consistent with the FTC’s focus on employment non-compete agreements and <a href="https://www.bakerlaw.com/insights/ftc-announces-action-against-no-hire-provisions-used-by-building-services-contractor/" target="_blank" rel="noreferrer noopener">corporate no-hire/no-poach agreements</a>, the 2025 Guidelines advise that agreements “that restrict workers from switching jobs or starting a competing business can violate the antitrust laws” and “other federal and state statutes.” Although the FTC’s rulemaking to broadly eliminate the use of employment non-competes was <a href="https://www.bakerlaw.com/insights/stop-the-notices-to-employees-ftc-noncompete-rule-vacated-nationwide/" target="_blank" rel="noreferrer noopener">blocked by a Texas federal court judge</a> in August 2024, the 2025 Guidelines remind employers that the Federal Trade Commission Act (15 U.S.C. §&nbsp;45) provides broad authority to challenge, on a case-by-case basis, “unfair methods of competition.” This case-by-case analysis approach appears to be most consistent with <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/2410029-planned-building-ferguson-concurrence-redacted.pdf" target="_blank" rel="noreferrer noopener">now-Chairman Ferguson’s view</a> of the FTC’s role going forward.

Other “restrictive, exclusionary, or predatory employment conditions”:

The 2025 Guidelines identify other employment-related restrictions as potentially raising competition issues. These include: (i) especially broad non-disclosure agreements that effectively prevent workers from accepting other work or starting a business, (ii) training repayment provisions that require reimbursement of training costs, often called “TRAPs”, (iii) non-solicitation agreements that prevent departing employees from soliciting former clients or customers, and (iv) provisions imposing a financial penalty for leaving. Critically, the 2025 Guidelines provide very little detail on when these types of restrictions may allegedly cross the line from legal to unlawful for the Agencies, other than to suggest they “can harm labor market competition by preventing workers from seeking, better, higher-paying jobs” and they “raise many of the same antitrust concerns as non-competes.”

Independent contractors:

The 2025 Guidelines note that the antitrust laws apply equally to independent contractors as they do to employees.&nbsp;

The 2025 Guidelines add that Agencies “may investigate and take action against businesses that make false or misleading claims” about workers’ potential earnings and identify four recent complaints against companies for allegedly falsely advertising that workers “would earn substantially more in compensation and/or tips than they did in reality.”

Based on the immediate criticism from now-Chairman Ferguson, it remains to be seen what impact the 2025 Guidelines will have, or whether some or all of the 2025 Guidelines will be withdrawn or altered. However, the first Trump administration aggressively investigated and pursued labor market related issues – including as criminal prosecutions – so it would be a mistake to discount them entirely. With or without strict deference by the Agencies to the expansive 2025 Guidelines, companies still need to be aware that antitrust enforcers have applied and will very likely continue to apply the antitrust laws to certain conduct in the labor markets, as they often try to do with any other goods or services market. Moreover, the 2025 Guidelines may also be picked up by State Attorneys General enforcers and private plaintiffs to support their own investigations, cases and initiatives.  

Please feel free to contact any of our experienced professionals if you have questions about these issues.

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