The current administration's pro-employee, pro-labor policy shift continues to take shape. We previewed here how this policy shift has begun to expand to other federal agencies and fields outside the traditional employment setting, including the Federal Trade Commission (FTC) and Chair Lina Khan's anticipated FTC enforcement and rulemaking efforts to regulate labor markets and strengthen antitrust law. The Department of Justice (DOJ) had begun focusing on labor markets more at the end of the last administration, with several criminal price-fixing cases involving labor markets. Recently, DOJ defeated an effort to dismiss the first of its criminal indictments, against an owner and director of a therapist staffing agency for alleged wage-fixing. A federal court in Texas recently denied the staffing agency owner's and codefendant's motions to dismiss the DOJ's criminal indictment, in which the court rejected their argument that the Sherman Antitrust Act does not allow for criminal prosecution of alleged wage-fixing (i.e., agreements between companies to fix employee wages or benefits at certain levels). See U.S. v. Jindal, Civ. No. 4:20-cr-00358 (E.D. Tex. Nov. 29, 2021).
In Jindal, the staffing agency acted as a middleman in which it staffed out therapists at certain established pay rates to home health agencies that paid the staffing agency higher billing rates. The DOJ alleges that the defendants conspired to encourage other therapist staffing agency competitors to collectively reduce the pay rates of therapist-contractors in order to increase the agencies' profit margins. In its opinion and order upholding the criminal indictments, the Texas court found that the DOJ's wage-fixing allegations, if true, are a per se violation of Section 1 of the Sherman Antitrust Act. This is significant because only per se violations of the Sherman Antitrust Act may be criminally prosecuted, and this is the first time a court has found wage-fixing to be per se unlawful in a criminal case. The court reasoned that conspiring to lower the pay rates of therapists constitutes lowering the price of labor, and "[w]hen 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.'" Therefore, the court reasoned, "an agreement to fix the price of labor is 'tantamount' to an agreement to fix prices" under antitrust law.
The court also rejected the defendants' Fifth Amendment due process argument that they did not receive "fair warning" that their conduct was considered criminal, since the DOJ has never prosecuted similar wage-fixing conduct in the past. The court noted that the lack of prior criminal enforcement actions for wage-fixing did not signify the defendants' due process rights were infringed. Rather, the court regarded the defendants as the "unlucky" first two individuals to face prosecution for this kind of conduct.
Furthermore, in support of the court's conclusion that wage-fixing is per se illegal, the Texas court pointed to the Supreme Court's recent ruling in NCAA v. Alston, which found the NCAA's cap on education-related compensation for student-athletes violates antitrust law. The court reasoned that Justice Kavanaugh's concurrence in Alston in effect characterized wage-fixing as price fixing. Although the Supreme Court declined to go so far as to classify wage-fixing as per se illegal, the Texas court nonetheless found the Alston decision supported the conclusion that horizontal agreements to fix the price of labor are per se violations of antitrust law.
While the Jindal case highlights the federal government's enforcement efforts and perspective that wage-fixing and potentially other labor restraints can be regarded as criminal anticompetitive conduct, the FTC is simultaneously focused on policymaking efforts related to labor market conditions. On December 6-7, 2021, the FTC hosted a two-day virtual, live-streamed workshop, "Making Competition Work: Promoting Competition in Labor Markets." Sessions included speakers from the FTC, academia, nonprofits, unions, and law firms discussing such topics as labor monopsony, contractual restraints on worker mobility, and intragovernmental agency efforts to promote competition policy.
We will continue to monitor the federal government's labor legal and policy efforts and developments that impact employers. If you have any questions about labor relations, law (including antitrust), or policy, please contact the authors of this article.