Washington, D.C. (December 14, 2020) - The Antitrust Division of the Department of Justice delivered on its stated intention to criminally prosecute collusion in labor and employment markets when it announced on December 10, 2020 its first criminal wage-fixing prosecution, charging the former owner of a Texas home healthcare 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, observers have waited for DOJ to bring criminal charges for collusion in the labor and employment markets. 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 it is understood that there are several open grand jury investigations into similar HR practices across a wide range of industries.
In the matter announced by the DOJ, the defendant, Neeraj Jindal, is the former owner of Integrity Home Therapy. He allegedly agreed with a competing therapy staffing agency between March and 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 FTC does not have criminal enforcement authority, however, so DOJ's indictment appears to address those concerns.
Previously, DOJ resolved allegations of wage fixing under its civil enforcement authority. The use by DOJ of its criminal enforcement authority in this area comes at a time when both the FTC and DOJ, along with members of Congress, have expressed concern about employer actions that allegedly suppress competition and thus wages in labor markets, including no-poach agreements between employers and non-compete provisions in employee hiring letters.
DOJ's action serves as an important reminder for companies to ensure that their antitrust 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.
Originally Published by Lewis Brisbois, December 2020
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