Justice Department Reveals Major ‘No-Poach’ Settlement

As federal government follows through on HR antitrust enforcement, Knorr-Wabtec consent decree could be its ‘template’

The Justice Department this month gave companies the clearest signal yet that it is living up to its promise to take a tougher stance on HR-related antitrust issues.

On April 3, the DOJ announced it reached a settlement with a pair of railroad industry companies over what it called a “no-poach” agreement between them. This was the first major HR-related antitrust case the DOJ has resolved since it issued joint guidance with the Federal Trade Commission on such cases in October 2016. That guidance warned employers the federal government would not only pursue civil actions against employers for no-poach and wage-fixing agreements — which it had long done — but also criminal charges. While the defendant employers in the new settlement avoided criminal charges, the DOJ’s action confirms for employers that it is taking serious action on HR-related antitrust violations.

No-poach agreements are pacts, both formal and informal, between competing employers to not solicit, recruit or hire each other’s employees. The FTC and DOJ say “naked” no-poach agreements —which occur without a legitimate business reason — deprive workers of employment opportunities in violation of the Sherman Act.

According to the DOJ lawsuit, rail equipment suppliers Knorr-Bremse AG and Westinghouse Air Brake Technologies Corporation, also known as Wabtec, entered into agreements not to compete for each other’s employees between 2009 and 2016. The agreements included a third company, Faively Transport S.A., which Wabtec acquired in November 2016 and in doing so solidified Knorr and Wabtec as two of the world’s largest rail suppliers. The department filed the complaint the same day it proposed the settlement.

To read this story and other complete articles featured in the April 30, 2017 print edition of Law Week Colorado, copies are available for purchase online.