New Antitrust Guidelines for Business Activities Affecting Workers

Just days before the change of administrations, the FTC and DOJ issued new Antitrust Guidelines for Business Activities Affecting Workers.

These are not your parents’ antitrust guidelines.

These guidelines go much further than the 2016 guidelines, (1) greatly expanding the conduct that the (current) FTC and DOJ (the “Agencies”) now view as potential antitrust violations and (2) encouraging “anyone who notices” any of the identified activities “or other suspicious behavior” to report it to the Agencies.

Consistent with the approach taken by the FTC under former Chair Lina Khan and the DOJ under President Biden, the new guidelines ground their authority in the contention that “antitrust laws protect competition for labor, just as they protect competition for goods and services that companies provide.” (Whether that’s correct or not is a discussion for another day.)

The stated intent of the guidelines is “to promote clarity and transparency for the public about how the Agencies identify and assess business practices affecting workers that may violate the antitrust laws.”

It is unclear how the new Administration (including the new FTC Chair, Andrew Ferguson, and the presumptive new head of the DOJ, Pam Bondi) will respond to these. Presumably, they will not enforce them. But until we know for sure, the guidelines are the stated position of the FTC and DOJ. And, instructively, the last version of the guidelines (admittedly far more narrow) did not go away during the prior Trump Administration.

Summary

The new guidelines are broken into eight sections, the first five of which discuss a nonexhaustive list of agreements that the FTC and DOJ contend “may violate antitrust laws.”

The next three sections focus on relationships between businesses and independent contractors (section 6); “false claims about workers’ potential earnings” (section 7); and how to report “potential antitrust violations.”

Each section is discussed below.

But before turning to them, note that the guiding principle will be “whether there is an agreement between businesses that harms competition for workers.” Further, as the guidelines make clear, “An agreement need not be explicit or written down in order to violate the antitrust laws. Agreements—sometimes called conspiracies, gentleman’s agreements, handshake agreements, or shared or mutual understandings—that violate the antitrust laws can be formal or informal; express or implicit; and need not be written down or talked about at all. Such agreements are illegal even if they are never carried out.” There are lots of details about how they will determine if there is an implicit agreement.

While that all sounds like it is (appropriately) B2B-focused, read on…

Agreements that may be unlawful (sections 1 through 5)

The guidelines identify the following 5 categories of agreements that they declare can be antitrust violations.

Section 1: “Some types of agreements, including wage-fixing and no-poach agreements, may violate the antitrust laws and can lead to criminal charges.” 

The Guidelines state that “[b]usinesses that compete with each other for workers may be committing an antitrust crime if they enter into an agreement not to recruit, solicit, or hire workers or to fix wages or terms of employment.” (Emphasis added.)

This should not come as a surprise; it was a major concern identified in the 2016 guidelines.

Section 2: “Franchise no-poach agreements may violate the antitrust laws.” 

While franchises were not covered in the original guidelines, this should come as no surprise given the FTC’s and DOJ’s stance on franchises in recent years.

Section 3: “Sharing competitively sensitive information—including wage information—with competitors may violate antitrust laws.”

A key point here is that “[i]nformation exchanges facilitated by or 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.”

This concept was in the original guidelines.

Section 4: “Non-compete clauses can violate antitrust and other laws.”

This should sound alarm bells.

This was expressly excluded from the original guidelines. But after the FTC’s failed Noncompete Rule, it is disturbing to see Lina Khan — who stated to Congress, “And of course we would proceed . . . in accordance with, you know, court decisions that that come down” — is essentially attempting an 11th-hour hail-Mary end-run around the decision. Though dressed up as a “guideline,” this section is unmistakably the Noncompete Rule by another name.¹

One can only hope that new leadership at the FTC and DOJ will disavow this. In that regard, we can assume that FTC Chair Ferguson will likely not endorse this, given his very clear dissent to last year’s Noncompete Rule, in which he stated, among other things, “Lawmaking by the administrative state sits uncomfortably in a democracy.”

Section 5: “Other restrictive, exclusionary, or predatory employment conditions can also be unlawful.”

Need more convincing that this is just a dressed up Noncompete Rule? Here is how section 5 starts:

The Agencies may also investigate and take action against other restrictive agreements that impede worker mobility or otherwise undermine competition.

The following examples illustrate how restrictive conditions could potentially violate the antitrust laws or other federal or state laws.

• • • Non-disclosure agreements can violate the antitrust laws when they span such a large scope of information that they function to prevent workers from seeking or accepting other work or starting a business after they leave their job. For example, a non-disclosure agreement drafted so broadly as to prohibit disclosure of any information that is “usable in” or “relates to” an industry may be unlawful.36 Non-disclosure agreements can also violate federal law when they are worded so broadly as to suggest that workers who report potential violations of law to state or federal law enforcement or regulators, or who cooperate with a government investigation, could face lawsuits and adverse employment consequences.
    • Training repayment agreement provisions are requirements that a person repay any training costs if they leave their employer. Depending on the facts and circumstances, these provisions can be anticompetitive, such as if they function to prevent a worker from working for another firm or starting a business.
    • Non-solicitation agreements that prohibit a worker from soliciting former clients or customers of the employer similarly can, depending on the facts and circumstances, be anticompetitive, such as if they are so broad that they function to prevent a worker from seeking or accepting another job or starting a business.
    • Exit fee and liquidated damages provisions require workers to pay a financial penalty for leaving their employer. Depending on the facts and circumstances, these provisions can be anticompetitive, such as if they prevent workers from working for another firm or starting a business.

It goes on from there, echoing many of the themes laid out in the Noncompete Rule.

This is the other section that should sound alarm bells.

If this guidelines were enforced as they seem to suggest, they would effectively eliminate every meaningful tool companies have to protect their trade secrets, other confidential information, customer relationships, and other legitimate business interests. Say goodbye to commercial ethics and hello to free-riders and scofflaws unfairly competing against companies that are no longer able to protect themselves.  

Other allegedly anticompetitive conduct (sections 6 and 7)

The next two sections make clear that the guidelines are broad and extend to other types of worker-related conduct.

Section 6: “The antitrust laws apply to agreements that businesses reach with independent contractors.”

This should come as no surprise. Though not in the 2016 guidelines, it was in the noncompete rule.

Section 7: “False earnings claims can violate the law.”

This section says making “false or misleading claims” (think overstating) the “potential” money workers (employees and independent contractors) can be unlawful. This section seems quite different from the others, but is presumably included in the guidelines because it involves conduct affecting workers.

Snitching encouraged

The final section is similar to what was in the 2016 guidelines, but expanded:

Section 8: “Report violations.”

This section encourages “anyone who notices any of the above activities or other suspicious behavior” to report it to the FTC and DOJ.

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As noted above, given the timing, we’ll see how things play out over the next four years. In the meantime, it’s always a good idea to review your agreements to keep them as narrow as possible. So whether this Administration or the next enforces “guidelines” like these, companies will at least be in the best position to defend themselves.

Firm resources: 

We know how hard it is to keep up with the ever-changing laws and requirements around the country for how you can protect company’s trade secrets, customer goodwill, and the integrity of your workforce. To help, we have created the following resources (available for free):

	50-State Noncompete Law Chart, the first of its kind and regularly updated (downloadable PDF) (to be updated for the new exemptions in Illinois and Pennsylvania)50-State and Federal Trade Secret Law Chart, providing a comparison of the trade secrets laws nationally to the Uniform Trade Secrets Act (downloadable PDF)
	Chart of Noncompete “Low-Wage” Thresholds and Criteria (downloadable)
	Notice requirements summary chart, providing details for each of the 8 states (plus D.C.) that has notice requirements related to noncompetes (downloadable PDF)
	“Changing Trade Secrets | Noncompete Laws” (dedicated blog page) now provides a current detailed summary of the changing landscape of trade secret laws and noncompete laws around the country, state by state and at the federal level
	Trade secret and other legitimate business interest protection plan strategy and checklist

We hope you find all of these resources useful. More will be coming.

And please note, we are grateful for all of the input we’ve received over the years. We welcome any suggestions for improvements that you may be willing to share.

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