31 October 2022

DOJ Secures First Win in Criminal Antitrust “No-Poach” Case

Last week, VDA OD LLC, a Nevada healthcare staffing agency providing nurses to a public school district, pleaded guilty to violating the criminal antitrust laws by entering into a “no-poach” agreement with a competitor. The Department of Justice (DOJ) charged VDA in 2021 with agreeing with a competitor agency not hire each other’s nurses—in other words, a “no-poach” agreement—as well as agreeing not to negotiate pay raises with its own nurses.

According to the DOJ, VDA’s plea agreement states that “VDA, through one of its employees, participated in a conspiracy with another contract health care staffing firm to suppress and eliminate competition by agreeing to allocate nurses and fix the wages of those nurses.” Following VDA’s guilty plea, the United States District Court for the District of Nevada sentenced VDA to pay a criminal fine of $62,000, along with paying $72,000 to the nurses harmed by VDA’s anticompetitive conduct.

VDA’s guilty plea is the DOJ’s first win in a criminal no-poach case since it first announced its intent to clamp down on antitrust violations in the labor market. Back in 2016, the DOJ issued guidance warning employers that anticompetitive agreements restricting the labor market could violate the criminal antitrust laws. The DOJ followed through in 2020 by bringing its first criminal charges against employers in “no-poach” cases. Although the DOJ lost two of these cases earlier this year when juries delivered acquittals for the employer, the fact that those cases survived motions to dismiss and VDA’s guilty plea indicate that DOJ’s Antitrust Division remains undeterred in cracking down on anticompetitive agreements to allocate labor through “no-poach” hiring agreements.

Employers should take note that the DOJ’s recent criminal prosecutions for antitrust labor violations take place within the context of renewed governmental focus on a broader range of anticompetitive employment practices. While criminal antitrust prosecutions for no-poach and wage-suppression agreements like VDA’s case remain rare, other federal agencies have signaled an interest in corralling a wider range of employer conduct perceived to be anticompetitive. Employers will want to be aware that government scrutiny of labor practices could extend beyond no-poach agreements and into murkier areas—such as agreements to share wage information among competitors.

To talk about how the federal government’s recent emphasis on curbing anticompetitive practices in the labor market could affect your organization, please contact one of the authors.