New Labor Task Force to Investigate and Prosecute Unfair and Anticompetitive Labor Market Conduct

On Feb. 26, Federal Trade Commission (FTC) Chairman Andrew Ferguson issued a “Directive Regarding Labor Markets Task Force” pursuant to which a Joint Labor Task Force is being organized consisting of the Directors of the Bureaus of Competition, Consumer Protection, and Economics, and the Office of Policy Planning.

The responsibilities of the Task Force will include, among others:

• Prioritizing investigation and prosecution of deceptive, unfair or anticompetitive labor market conduct

• Engaging in public outreach informing workers of the state of the law and encouraging them to report deceptive, unfair or anticompetitive labor market conduct to the FTC

• Creating an information-sharing protocol across the Bureaus to exchange best practices for uncovering and investigating deceptive, unfair or anticompetitive labor market conduct

• Identifying opportunities for advocacy on legislative or regulatory changes that would remove barriers to labor market participation, mobility and competition

• Harmonizing and coordinating investigations and enforcement involving the Bureaus

In announcing the formation of the Task Force, Chairman Ferguson commented: “[w]hile all Americans are harmed by unfair business activities that raise the prices they pay when they shop, their ability to earn a living is equally — if not more — harmed by deceptive, unfair, and anticompetitive employer labor practices that drive down what they earn for their labor.”

In the Directive, Chairman Ferguson provides as examples of what may constitute deceptive, unfair and anticompetitive labor practices, among others:

• No-poach, non-solicitation or no-hire agreements, where employers agree to refrain from hiring each other’s employees and which can be a per se violation of the competition laws

• Wage-fixing agreements, where employers agree to fix the level of wages offered to employees which represent a hardcore violation of the competition laws subject to the per se standard

• Noncompete agreements, which employers can use to impose unnecessary, onerous and often lengthy restrictions on former employees’ ability to take new jobs in the same industry after they leave their employment

• Labor-contract termination penalties, through which an employer can impede its workers from switching to a competing employer by imposing unjustified fees when workers want to end their contracts

• Labor market monopsonies, where a business uses anticompetitive methods to create or maintain significant buyer power in a market for labor

• Unfair or deceptive practices with respect to job hiring such as deceptive job advertising and job scams

• Collusion or unlawful coordination on DEI metrics, which may have the effect of diminishing labor competition by excluding certain workers from markets, or students from professional training schools, on the basis of race, sex or sexual orientation

Given the breadth of the Task Force’s responsibilities, it is clear that, notwithstanding the change in the composition of the FTC on account of the change in administration and the impact it may have on the Commission’s priorities and approaches to enforcement, “rooting out” and prosecuting deceptive, unfair and anticompetitive labor-market practices will remain a priority.

The formation of the Task Force comes just weeks after the Commission, prior to the change in administration, issued guidelines explaining how it will assess whether business practices affecting workers violate the antitrust laws.

Chairman Ferguson filed a dissent objecting to the fact that the guidelines were being issued just before the inauguration, while at the same time stating that the “antitrust laws protect employees from unlawful restraints of the labor markets, and guidance reflecting the Commission’s enforcement position on these issues promotes important transparency and predictability to market participants.”

In the health care market, no-poaching, confidentiality clauses, noncompete clauses and related restrictions in agreements required as a condition of employment, and between employers, including those involving allegations of wage-fixing, have already been subject to challenge under the Sherman Act by employees in class action lawsuits and by the Department of Justice, including in criminal cases.