September 26 Tip of the Week
“Increased Employee Protections”
As we have seen over the last two years or more, there is an increased effort on the part of the federal government to protect workers’ rights. This is most clearly seen in the area of union organizing and has led to successful union campaigns at large, national employers such as Amazon and Starbucks. Another area of worker protection that has been in the news in the last few years is wage fixing and anti-competition activities among staffing agencies. There have been at least three indictments of staffing agencies in the health care industry involving companies who have joined together to control the wages of the health care workers that they place in various settings.
The first such indictment occurred in Northern Texas in December 2020 and involved the owner of a company that placed physical therapists and physical therapy assistants in homes to provide physical therapy services. The owner of this company entered into an agreement with another similar company (Company B) where both companies would pay certain physical therapists and physical therapy assistants lower wages. In addition to the contract with Company B, the owner also attempted to engage in agreements with other similar companies in the area in an effort to hold down the wages of his workers. The Department of Justice indicted the owner of the initial company under the Sherman Act, which prohibits these types of agreements that interfere with competition and restrain trade.
In April 2021, another staffing company, this time in Nevada, was indicted by the Department of Justice due to its involvement in an agreement to interfere with the hiring of school nurses. This case involved two health care staffing agencies who provided school nurses to the Clark County School District. According to the indictment, these two health care staffing agencies entered into an agreement not to compete with each other when filling nursing vacancies in the school district. As part of that agreement, both parties agreed to clauses regarding into “no-poaching” and “wage fixing.” Both companies promised not to recruit nurses from the other company and both companies agreed that they would not agree to any demands for wage increases by their employees.
No poach agreements and wage fixing are per se unlawful under the Sherman Act. A violation of the Sherman Act can result in a maximum penalty of 10 years in prison and a fine of $1 million per individual and $100 million per company. In 2018, as part of the response to the COVID pandemic and the difficulty in finding health care workers, the Department of Justice issued a public statement that it was investigating a number of no poach agreements in the health care industry. A similar indictment involving four home health care agencies was issued in Maine in January 2022, signaling a continued commitment to protecting health care workers from anti-competition agreements among staff agencies that negatively impact workers and their wages.
What does this mean for employers in general? These activities by the Department of Justice show a continued commitment to protect workers rights and to take action against employers who engage in conduct that interfere with those rights. Employers should avoid engaging in any conduct or behavior that appears to interfere with an employee’s right under the National Labor Relations Act or impacts the ability of an employee to negotiate their wage or salary. If approached by a competitor or other company and asked to engage in an agreement that appears to violate the Sherman Act, an employer should not agree to any provisions that interfere with competition. When in doubt about an affiliation or an agreement with another company, contact myHRcounsel and we assist you in determining the legality of the agreement.