Over the years, Federal Regulators have steadily increased their scrutiny of agreements that restrict solicitation, wages or movement of employees. The Department of Justice Antitrust Division and Federal Trade Commission released Antitrust Guidance for Human Resource Professionals back in 2016. These Guidelines focused on wage-fixing and “no-poach” agreements between companies.
The effect and enforcement of these guidelines is becoming clear with the DOJ bringing criminal charges for wage-fixing against the former owner of a physical therapy staffing agency. Private actions have also been pursued by antitrust class action lawyers representing individuals in similar medical staffing cases.
On December 10, 2020, the former owner of a therapist staffing company was indicted for participating in a conspiracy to fix prices by lowering wages paid to physical therapists and physical therapist assistants in North Texas and the Dallas-Fort Worth area. The co-conspirators agreed to pay lower rates to certain physical therapists and assistants from approximately March 2017 through August 2017.
On November 30, 2021, the DOJ survived a challenge to dismiss the charges in the case. This marks the DOJ’s first criminal wage-fixing antitrust case where the U.S. District Court denied the motion to dismiss and allowed the criminal wage-fixing claims to go forward. The Court, in its Order, noted that “The Sherman Act is enforced both criminally and civilly” but “the Department of Justice has a longstanding policy of only bringing criminal antitrust prosecutions based on per se violations of the Act.”
In their motion to dismiss, the Defendants argued that the case should be dismissed because it failed to state a per se violation of the Sherman Act. The core of the Defendants’ argument was that the Indictment “does not allege any agreements to fix ‘prices’ because wages do not fall within the definition of ‘price fixing’ which is defined as ‘fixing…. the price of a commodity.” The Indictment alleged that the conspiracy was a per se violation of the Sherman Act and accordingly, “to obtain conviction, it does not need to prove market power, intent, or any anticompetitive effects on trade—it simply must prove the bare fact that an agreement existed.”
The Court found that the price-fixing agreements warranted broad application of the per se rule. It noted that “any naked agreement among competitors—whether by sellers or buyers—that fixes components that affect price meets the definition of a horizontal price-fixing agreement.” While the Court noted that the present case does not involve a typical price-fixing agreement where sellers fix the prices of goods they sell, it is nonetheless unlawful as “the alleged agreement between Defendants and co-conspirators had the purpose and effect of fixing the pay rates of the PTs and PTAs—the price of labor. When the price of labor is lowered, or wages are suppressed, fewer people take jobs, which “always or almost always tend[s] to restrict competition and decrease output.”
Based on Supreme Court precedents, the Court noted that “Sherman Act applies equally to all industries and markets—to sellers and buyers, to goods and services, and consequently to buyers of services—otherwise known as employers in the labor market.” The Court held the naked price-fixing conspiracy among buyers in the labor market to be a per se violation of the Sherman Act.
Other similar actions where DOJ is aggressively pursuing collusion in the labor market include an indictment of an ambulatory surgical center company for entering into agreements with two of its competitors for non-solicitation. Most recently, DOJ filed an indictment against a healthcare staffing company for entering into an agreement with their competitor to fix nurses’ wages.
Lowey Dannenberg antitrust class action lawyers represent individuals and institutions in antitrust class action cases nationwide. If you wish to speak to a member of Lowey Dannenberg’s antitrust practice group, please feel free to reach out Christian Levis (firstname.lastname@example.org) or Noelle Feigenbaum (email@example.com).
 United States v. Surgical Care Affiliates, LLC and SCAI Holdings, LLC, No. 3:21-cr-011-L (N.D. Tex. Jan. 5, 2021)
 United States v. Ryan Hee and VDA OC, LLC, formerly ADVANTAGE ON CALL, LLC, No. 2:21-cr-00098-RFB-BNW (D. Nev. Mar. 26, 2021)