united-states employment civil-procedure tort antitrust-law
Am I experiencing an anti-trust violation?
<p>Google, Apple et al were fined $430 million dollars recently for, among other things, agreeing not to poach each other's employees. One illegal thing that happened: an internal recruiter was fired for poaching. Agreements against poaching limit employee mobility in the market - recruiters don't reach out to qualified candidates because of who they work for, harming their negotiating position.</p>

<p>I work for a ~200k person firm which uses internal and external recruiters. I've talked to the three recruiting agencies I had standing relationships with. All three recruiters have declined to interview me for jobs I am qualified for because of my employer - one of them even asked for a "note from [my] manager" saying it was okay to hire me. Given that this is policy, every company that works with these recruiters is entering into an implicit agreement that limits job mobility. Rather than acting as information broker to improve functioning of the labor market, the recruiter functions as cartel of sorts, where employers band together to limit the ability of their employees to switch jobs to other employers in the cartel, thus damaging negotiating power and driving down wages.</p>

<p>This seems to have de facto the same effect as Google et al's behavior. The difference is the recruiters are external and not internal, and the collusion is a "courtesy" that the recruiters pay to their client.</p>

<p>Is this an anti-trust violation? Why or why not? Asking from the USA.</p>

<p><strong>Short Answer</strong></p>

<p>It might or might not be an anti-trust violations depending upon the states where the employers and employee are located. </p>

<p>But, as a practical matter, it is almost impossible for an employee to prove an anti-trust violation without an insider leaking a "smoking gun" document or a company admitting to improper conduct, before a lawsuit is filed.</p>

<p><strong>Long Answer</strong></p>

<p>There is considerable regional variation regarding the extent to which legal arrangements to limit employee mobility are legal. For example, historically, Massachusetts is notorious for enforcing such limitations strictly. In contrast, California is famous for refusing to enforce such restrictions. In general, the Northeast is strict, the West is lenient and other states are in between, but it is really a state by state issue. (Incidentally, weak non-competition laws have been empirically shown by economists to be better for the economy in the sector where they might be applied but are not applied.)</p>

<p>Usually these legal restrictions on employee mobility are imposed unilaterally by the employer without conferring with competitors, and sometimes remedies for a violation of these non-competition arrangements are limited to the employee and not the hiring company (although this is hardly universal - the intentional interference with contract tort historically arose to punish companies that induced employees to violate non-competes and duties of loyalty of existing employees of the suing firm).</p>

<p>The anti-trust dimension comes from the agreement between competitors to honor each other's non-competition agreements, which is meaningful because in the states where Apple and Google are headquartered, non-competition agreements are basically unenforceable so this collusion between competitors has an effect in excess of the default legal situation in the absence of collusion. </p>

<p>If Apple and Google had instead both been based in Boston instead, where their non-competition agreements were enforceable against both the employee and the new employer as a default rule of law, their agreement would probably not have violated anti-trust laws because they would simply be agreeing to follow the generally applicable law that would apply in the absence of a collusive agreement anyway.</p>

<p>Thus, without knowing the default rules of law in the relevant states, and without knowing if there was actually an actual agreement between the competitors, you can't sue for an anti-trust violation.</p>

<p>One of the recent revolutions in federal civil procedure, the <em>Twombly</em> case, arose in an anti-trust situation and held that a complaint for an anti-trust violation is not sufficient unless the person bringing suit has actual knowledge of the existence of a collusive agreement between competitors and does not merely infer the existence of such an agreement from the facts and circumstances available to the general public. It is not permissible to sue first and then use subpoenas and other pre-trial discovery procedures to determine if there was actually an express collusive agreement between the competitors rather than having their behavior arise for other reasons (since under Econ 101 microeconomic principles, marketwide price fixing by all participants and completely non-collusive perfect competition are indistinguishable as they both produce a uniform price in the marketplace for a good or service). </p>

<p>Since this information is usually impossible to obtain prior to brining suit without an insider who leaks a smoking gun document, as a practical matter, it is usually impossible for an individual employee to prevail in an anti-trust lawsuit alleging collusion between competing firms.</p>

<p>Under federal anti-trust laws, circumstances that have the de facto identical results to illegal collusion between competitors, where this is not actually collusion, are usually not actionable (i.e. you can't prevail in a lawsuit based upon those claims).</p>

<p>The Sherman Act makes illegal "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." Any agreement between two or more parties that harms a third party by restraining trade or commerce is an antitrust violation.</p>

<p>In your case, your company uses an external recruiting agency and has an agreement with them that they will not poach employees from the company as a condition of doing business. This clause restrains trade and harms third parties (employees of the company, by effectively reducing their job mobility and salary due to reduced competition).</p>

<p>The clause is illegal, the contract that contains it is null and void (unless it contains language that keeps the other terms in full force and effect if some terms are found to be unenforceable, which is common), and you and your colleagues are personally entitled to receive money damages.</p>

<p>I am not a lawyer. I think you should talk to one because I think you'd win.</p>
