A recently-exposed string of no-poach arrangements is making headlines – prompting compensation and HR leaders to take a closer look at recruiting practices, employment policies, and vendor relationships.
In a no-poach arrangement, employers agree not to recruit or hire workers from one another. However, these agreements are illegal under U.S. antitrust law, as such practices restrict employee mobility and suppress wages.
These restrictions don’t have to be in writing to be illegal. Even informal “understandings” or mutual practices can raise legal red flags.
Recent (Alleged) Violations
Several recent cases show the scope and seriousness of enforcement activity:
Shipbuilders Face Supreme Court Scrutiny
The U.S. Supreme Court recently asked the Solicitor General to weigh in on a lawsuit involving General Dynamics and other defense contractors accused of an “unwritten” agreement not to hire each other’s naval engineers. Learn more about this case here.
Hospitals Settle With Nurses for $28.5 Million
Geisinger Health and Evangelical Community Hospital agreed to a major settlement with nurses and hospital staff over an alleged arrangement not to recruit each other’s clinical employees. Learn more about this case here.
Wealth Management Firms Pay $25 Million in Class Action
Mariner Wealth Advisors and other firms resolved allegations that they conspired not to hire each other’s financial advisors, allegedly suppressing wages and career mobility. Learn more about this case here.
Policy Spotlight
The Sherman Antitrust Act of 1890 originally prohibited agreements that restrain trade, but courts and regulators have long held that these same principles apply to labor markets. The Department of Justice (DOJ) and Federal Trade Commission (FTC) have jointly stated that when employers agree not to recruit or hire each other’s workers, they are engaging in an unlawful restraint of trade. Updated DOJ and FTC guidance issued in January 2025 reaffirmed that labor market enforcement remains a policy priority.
Why Now? The Wage Growth Backdrop
The resurgence of these cases isn’t happening in a vacuum. Over the past five years, wage growth has been historically strong – particularly in healthcare, professional services, and engineering. In a tight labor market, some employers appear to have turned to hiring restrictions as a way to manage rising costs or limit turnover.
Recent trends from the Atlanta Fed Wage Growth Tracker and Employment Cost Index highlight the continued pressure on wages.
Navigating Labor Market Practice Scrutiny
Compensation and HR leaders play a critical role in preserving both talent strategy and compliance integrity. As scrutiny of labor market practices intensifies, consider these recommendations:
- Rely on published compensation survey data compiled by qualified, independent third parties, not informal discussions or side agreements. When conducted appropriately, this is a well-established safe harbor under antitrust law.
- Avoid any agreements or understandings, formal or informal, to not recruit or hire from competitors.
CBIZ Compensation Consulting works with organizations to design and implement compensation programs that stand up to regulatory scrutiny and align with real-world talent competition, giving leaders the confidence to compete for talent without crossing legal lines.
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