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Google, Apple et al were fined $430 million dollars recently for, among other things, agreeing not to poach each other's employees. One illegal thing that happened: an internal recruiter was fired for poaching. Agreements against poaching limit employee mobility in the market - recruiters don't reach out to qualified candidates because of who they work for, harming their negotiating position.

I work for a ~200k person firm which uses internal and external recruiters. I've talked to the three recruiting agencies I had standing relationships with. All three recruiters have declined to interview me for jobs I am qualified for because of my employer - one of them even asked for a "note from [my] manager" saying it was okay to hire me. Given that this is policy, every company that works with these recruiters is entering into an implicit agreement that limits job mobility. Rather than acting as information broker to improve functioning of the labor market, the recruiter functions as cartel of sorts, where employers band together to limit the ability of their employees to switch jobs to other employers in the cartel, thus damaging negotiating power and driving down wages.

This seems to have de facto the same effect as Google et al's behavior. The difference is the recruiters are external and not internal, and the collusion is a "courtesy" that the recruiters pay to their client.

Is this an anti-trust violation? Why or why not? Asking from the USA.

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Short Answer

It might or might not be an anti-trust violations depending upon the states where the employers and employee are located.

But, as a practical matter, it is almost impossible for an employee to prove an anti-trust violation without an insider leaking a "smoking gun" document or a company admitting to improper conduct, before a lawsuit is filed.

Long Answer

There is considerable regional variation regarding the extent to which legal arrangements to limit employee mobility are legal. For example, historically, Massachusetts is notorious for enforcing such limitations strictly. In contrast, California is famous for refusing to enforce such restrictions. In general, the Northeast is strict, the West is lenient and other states are in between, but it is really a state by state issue. (Incidentally, weak non-competition laws have been empirically shown by economists to be better for the economy in the sector where they might be applied but are not applied.)

Usually these legal restrictions on employee mobility are imposed unilaterally by the employer without conferring with competitors, and sometimes remedies for a violation of these non-competition arrangements are limited to the employee and not the hiring company (although this is hardly universal - the intentional interference with contract tort historically arose to punish companies that induced employees to violate non-competes and duties of loyalty of existing employees of the suing firm).

The anti-trust dimension comes from the agreement between competitors to honor each other's non-competition agreements, which is meaningful because in the states where Apple and Google are headquartered, non-competition agreements are basically unenforceable so this collusion between competitors has an effect in excess of the default legal situation in the absence of collusion.

If Apple and Google had instead both been based in Boston instead, where their non-competition agreements were enforceable against both the employee and the new employer as a default rule of law, their agreement would probably not have violated anti-trust laws because they would simply be agreeing to follow the generally applicable law that would apply in the absence of a collusive agreement anyway.

Thus, without knowing the default rules of law in the relevant states, and without knowing if there was actually an actual agreement between the competitors, you can't sue for an anti-trust violation.

One of the recent revolutions in federal civil procedure, the Twombly case, arose in an anti-trust situation and held that a complaint for an anti-trust violation is not sufficient unless the person bringing suit has actual knowledge of the existence of a collusive agreement between competitors and does not merely infer the existence of such an agreement from the facts and circumstances available to the general public. It is not permissible to sue first and then use subpoenas and other pre-trial discovery procedures to determine if there was actually an express collusive agreement between the competitors rather than having their behavior arise for other reasons (since under Econ 101 microeconomic principles, marketwide price fixing by all participants and completely non-collusive perfect competition are indistinguishable as they both produce a uniform price in the marketplace for a good or service).

Since this information is usually impossible to obtain prior to brining suit without an insider who leaks a smoking gun document, as a practical matter, it is usually impossible for an individual employee to prevail in an anti-trust lawsuit alleging collusion between competing firms.

Under federal anti-trust laws, circumstances that have the de facto identical results to illegal collusion between competitors, where this is not actually collusion, are usually not actionable (i.e. you can't prevail in a lawsuit based upon those claims).

  • Interesting. De facto collusion is not collusion without evidence. I do have an email stating that they can't work with me without a note from my manager. This feels like evidence of collusion beyond info available to the general public. I could also probably convince a recruiter to send me text describing the agreement. – canisrufus Jun 15 '17 at 2:11
  • justice.gov/atr/file/903511/download "Even if an individual does not agree orally or in writing to limit employee compensation or recruiting, other circumstances – such as evidence of discussions and parallel behavior – may lead to an inference that the individual has agreed to do so." – canisrufus Jun 15 '17 at 12:31
  • @canisrufus The critical point there is the "and". If you have both discussions AND parallel behavior, you can beat Twombly. Parallel behavior alone doesn't cut it. – ohwilleke Jun 15 '17 at 19:22
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    That is an important point. It seems to me that the parallel behavior clearly exists, and if I had a note from my employer granting me permission to look for other work, that would be evidence that such an understanding exists. Probably ought to find an employment lawyer to talk this through with. – canisrufus Jun 16 '17 at 14:02
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    @canisrufus You should find a lawyer to talk this through with and a note from your employer, in and of itself wouldn't prove an agreement between employers which is what must be established. – ohwilleke Jun 19 '17 at 17:01
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The Sherman Act makes illegal "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." Any agreement between two or more parties that harms a third party by restraining trade or commerce is an antitrust violation.

In your case, your company uses an external recruiting agency and has an agreement with them that they will not poach employees from the company as a condition of doing business. This clause restrains trade and harms third parties (employees of the company, by effectively reducing their job mobility and salary due to reduced competition).

The clause is illegal, the contract that contains it is null and void (unless it contains language that keeps the other terms in full force and effect if some terms are found to be unenforceable, which is common), and you and your colleagues are personally entitled to receive money damages.

I am not a lawyer. I think you should talk to one because I think you'd win.

  • We should see the exact clause language before declaring it null and void. As is, we have only the plaintiff's interpretation. – bishop Jun 14 '17 at 22:36
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    @bishop That is, of course, true. There are lots of practical difficulties with pursuing action in a case like this and I was deliberately trying to be very decisive in recommending it be pursued to provide encouragement. Not only can the employee not see the agreement before suing, but taking this kind of action may harm one's career in not just that industry, but all industries. The amount of damages to the individual may not justify the risks. – Patrick87 Jun 14 '17 at 22:44
  • The analysis in this answer is just about 100 percent incorrect, as it ignores more than a century of antitrust case law. Try running a Rule of Reason analysis to make this a useful answer. – bdb484 Jan 4 at 3:33

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