In early 2025, just before the second Trump administration took office, the Department of Justice (DOJ) made a resolute declaration. They reaffirmed their unwavering commitment to relentlessly pursuing any suspected instances of no-poach and wage-fixing agreements, considering them to be per se violations of antitrust laws.
The DOJ's recent triumph in the federal case U.S. v. Lopez is a significant milestone. This landmark trial resulted in the conviction of a business executive for his involvement in a wage-fixing conspiracy and for concealing vital information during the sale of his company, serving as a robust indicator of the DOJ's heightened attention in this area.
With this trial marking the DOJ's first court victory involving wage-fixing charges as criminal antitrust violations, the government's commitment to prosecuting these cases has reached a new level of vigor.
Simply put, while the DOJ's Antitrust Division has faced significant challenges in securing convictions in no-poach and wage-fixing cases, they are still pursuing such cases.
The DOJ's efforts have been largely unsuccessful, and their last remaining criminal no-poach case was voluntarily dismissed in November 2023. Despite these setbacks, the DOJ continues to emphasize the importance of preserving competition in labor markets and has secured a first-ever jury conviction in a criminal labor market antitrust case.
Continued Enforcement of the Law
The DOJ maintains a steadfast stance that no-poach and wage-fixing agreements are unequivocally illegal under antitrust laws. They continue to rigorously investigate and prosecute these cases, underscoring the gravity of these violations and the DOJ's unwavering determination to uphold the law.
DOJ officials have publicly stated their commitment to protecting workers from these types of agreements, emphasizing that they harm competition and suppress wages. They view these cases as impacting the ability of hardworking people to secure employment and earn a living wage.
Some people suggest that the DOJ may be taking a more selective approach to bringing these cases, focusing on situations where they believe the evidence is stronger.
Despite earlier losses, companies should be aware that the DOJ continues to view no-poach and wage-fixing agreements as serious antitrust violations. Businesses should review their hiring practices, non-solicitation agreements, and internal policies to ensure they comply with antitrust laws and avoid potential legal repercussions.
What is a No-Poach Agreement?
A no-poach agreement occurs when two or more employers agree not to hire or solicit each other's employees. These agreements limit workers' mobility, often suppress wages, and curtail career advancement opportunities.
For example, if two companies in the same industry agree not to recruit employees from each other, this collusion stifles competition in the labor market. Workers are prevented from negotiating better pay or seeking positions with higher responsibility, as their options are artificially restricted.
Simply put, a no-poach agreement is an illegal deal between competitors in which they agree not to hire, recruit, or solicit each other's employees. Anticompetitive agreements can be verbal or written promises to:
- Avoid contacting a competitor's employees,
- Agreements not to hire, or
- Agreements not to match offers made by competitors.
Typically, they are made between managers and executives without the knowledge of the employees. Frequently, they are made by top executives and are referred to as "gentlemen's agreements."
No-poach agreements restrict employee mobility and prevent them from obtaining fair wages in a competitive market. By restricting mobility, these agreements do permanent and irrevocable damage to career goals and development.
They also eliminate competition and prevent employers from obtaining competing offers, which can be used to secure better compensation from current and future employers.
The implementation of illegal no-poach agreements is widespread and on the rise. No-poach agreements are prevalent in nearly every industry worldwide. The most common sectors affected by no-poach agreements are technology, healthcare, government contractors, and professional services.
What is a Wage-Fixing Agreement?
A wage-fixing agreement, on the other hand, involves employers colluding to set or cap wages at certain levels. This could involve setting maximum pay rates or agreeing not to increase wages beyond a fixed limit. Wage-fixing agreements harm employees by depriving them of the fair value of their work, as employers work together to suppress wages instead of competing to attract and retain talent.
Both of these practices are considered illegal under U.S. antitrust laws because they restrict competition and exploit workers. The DOJ has clarified its position that these agreements constitute "per se" violations of the Sherman Antitrust Act, meaning they are inherently illegal without the need for further evidence of anticompetitive harm.
Simply put, a wage-fixing agreement is a collusion between two or more businesses to artificially fix or control the wages and employment terms of their employees.
This can include setting pay rates, lowering wages, or limiting the terms and conditions of employment. Such agreements are generally considered illegal under antitrust laws because they restrain competition in the labor market and can harm workers.
The DOJ's Renewed Commitment
Over the past decade, the DOJ has increased efforts to identify and prosecute antitrust violations in labor markets. This shift began in 2016, when the DOJ announced that it would treat no-poach and wage-fixing agreements as criminal offenses, rather than resolving them through civil enforcement. These agreements are now seen as clear violations of the law deserving of criminal prosecution.
The concept of "per se" violations is key to the DOJ's approach. Under this rule, the illegality of these agreements doesn't depend on their effects. Participating in a no-poach or wage-fixing conspiracy is sufficient to justify prosecution, as such agreements harm both employees and the broader economy.
Why U.S. v. Lopez Matters
The recent conviction of Eduardo "Eddie" Lopez in Nevada highlights the DOJ's commitment to prosecuting these cases. This case centered on Lopez's role in conspiring to cap wages for registered nurses and licensed practical nurses who provided home healthcare services in Las Vegas.
According to evidence presented at trial, this wage-fixing agreement spanned three years, from 2016 to 2019, and impacted hundreds of workers. Following a trial, Lopez was convicted of one count of participating in a wage-fixing conspiracy in violation of the Sherman Act and five counts of wire fraud.
The Lopez case is especially significant because it marks the DOJ's first trial victory in prosecuting wage-fixing charges. Previously, some cases had been resolved through plea agreements or dismissed due to a lack of sufficient evidence. The successful conviction in a courtroom trial demonstrates the DOJ's ability to effectively present these cases to a jury, likely boosting their confidence to pursue additional prosecutions in the future.
Implications of U.S. v. Lopez
The implications of this case are far-reaching. By securing a guilty verdict in U.S. v. Lopez, the DOJ has set an important precedent that will likely inspire more aggressive enforcement of antitrust laws in labor markets. Employers are now more vulnerable to scrutiny and prosecution if they engage in wage-fixing or no-poach agreements.
The DOJ has made it clear that the rights of workers are a top priority, and they have the tools and legal framework to hold employers accountable. For anyone suspected of involvement in these types of agreements, it is crucial to understand the seriousness of the allegations and to seek legal guidance to protect your rights and interests.
Why is This Case Significant?
This jury verdict is noteworthy as the first-ever jury conviction for a wage-fixing conspiracy under the Sherman Act since the Department of Justice's 2016 decision to pursue wage-fixing and no-poach agreements as criminal, rather than civil, offenses.
Additionally, it also follows a string of losses for the DOJ in 2022 and 2023, where several cases, such as the United States v. Manahe (2023), United States v. Jindal (2022), and United States v. DaVita (2022), all ended in acquittals or dismissal after juries found insufficient evidence of unlawful agreements to allocate labor markets or fix employee wages.
However, in one case, the DOJ secured a guilty plea against a nurse staffing agency for allegedly having conspired with competing agencies to fix nurse wages before the case proceeded to trial. Thus, the Lopez case represents a pivotal development in the Division's campaign to strengthen enforcement in labor markets.
Why are Common Defenses?
Defending against antitrust charges often requires a multifaceted approach, leveraging several possible legal strategies as discussed by our federal criminal defense lawyers below.
- No Illegal Agreement. This defense argues that no agreement or concerted action violated antitrust laws.
- Lack of Market Power. Perhaps we can argue that they lack sufficient market power to negatively affect competition, which is crucial for charges under the Sherman Act concerning monopolization.
- Pro-competitive Justifications. Certain anti-competitive actions can be justified with pro-competitive benefits. For example, some mergers can lead to efficiencies that benefit consumers more than the potential harm from reduced competition.
- Compliance Programs. Perhaps we can demonstrate that the company has an active antitrust compliance program, which can sometimes help mitigate penalties or serve as a defense against claims of intentional wrongdoing.
For more information, contact our federal criminal defense law firm, Eisner Gorin LLP, based in Los Angeles, California.
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