by Elizabeth Hogue, Esq.
It may be tempting for providers to enter so-called "no poaching agreements" due to staffing shortages and a lack of capable managers, including marketing staff, which continue to plague the healthcare industry. These agreements often involve conspiring with rivals not to solicit or hire each other’s employees.
Don't do it!
According to the Department of Justice, these agreements may produce artificial suppression of employees' compensation and may violate the federal Sherman Act. Violations of the Sherman Act could result in criminal prosecution or civil enforcement actions. There has been a dramatic increase in both types of action under the Sherman Act based on "no-poach" agreements.
The Department of Justice has now succeeded in criminal prosecution of this type of arrangement in United States v. Hee et al [Case No. 2:21-cr-00098, D. Nev; (October 27, 2022)].
In this case, the DOJ charged VDA, a health staffing company, and Ryan Hee, a regional manager for VDA, with violation of Section 1 of the Sherman Act by conspiring with another company to refrain from poaching each other's nurses and to fix their wages. As a result of a guilty plea, VDA was ordered to pay $139,000 as a criminal fine and restitution.
VDA was one of two primary providers of contract nursing services to the Clark County School District from October of 2016 until July of 2017. During this time, VDA participated in a conspiracy with another contract health care staffing company to allocate nurses and fix their wages. The agreement in question lasted for less than nine months, after which VDA was sold.
In addition, VDA has pointed out that the no poach agreement involved only a single telephone conversation and one email message between one of VDA’s employees and a competitor’s employee. This conversation and email message both occurred on the same day six years ago immediately after the Department of Justice published its Antitrust Guidance for HR Professionals.
Based upon the above, it clearly does not take much to produce a criminal conviction in this area. Although this case involved a "no poach" agreement, it certainly signals that the DOJ is serious about antitrust enforcement in general. There are three other labor market criminal cases brought by the DOJ that are still pending. Stay tuned for more developments in this area.
©2022 Elizabeth E. Hogue, Esq. All rights reserved. No portion of this material may be reproduced in any form without the advance written permission of the author.
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