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Wage Fixing Indictment Has Implications for Employers

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by Robert Sheen

3 minute read:

A recent federal wage-fixing indictment against the former owner of a health care staffing company indicates that the Department of Justice’s Antitrust Division is taking a closer look at the competition in labor markets. Employers nationwide, especially health care operators, would be wise to take notice.

“Senior government officials have given speeches emphasizing the importance of competition in labor markets,” noted the ESG law firm Mintz, adding that the Antitrust Guidance for HR Professionals (published by the DOJ and the Federal Trade Commission) served as an indicator of “the Division’s intention to charge a criminal violation under the right circumstances.”

According to the DOJ’s website, the employer was “participating in a conspiracy to fix prices by lowering the rates paid to physical therapists and physical therapist assistants in north Texas.” The employer was also charged with obstructing a separate investigation into the same conduct by the FTC.

The DOJ defines wage fixing as an “agreement among competing employers to limit or fix the terms of employment for potential hires.” Such an agreement may violate antitrust laws if it “constrains individual [employers’] decision-making with regard to wages, salaries, or benefits; terms of employment; or even job opportunities.”

According to the National Law Review, prosecution of the Texas employer aligns with the DOJ’s continued focus on anticompetitive conduct in the health care labor market. The Department of Justice announced in 2018 that it was investigating several no-poach agreements in the healthcare industry. And today, “health care employers, staffing companies, and recruiters should be particularly careful of their conduct in the hiring, recruitment, and retention of workers throughout the COVID-19 pandemic.”

The National Law Review also pointed out that the DOJ and FTC made their intentions clear back in April 2020: the COVID-19 crisis is not a “get-out-of-jail-free card when it comes to collusion or other anticompetitive conduct that may harm front line workers.” The agencies recognize that private businesses and individuals need to cooperate during the COVID-19 crisis; however, this “cooperation cannot extend to agreements that harm workers.” It’s safe to say that the agencies are on “high alert for such conduct and the COVID-19 pandemic has clearly not been a deterrent to the Department of Justice in prosecuting criminal antitrust matters.”

And it’s not just wage fixing: The DOJ’s Antitrust Division is also on the lookout for illegal no-poach agreements, warning that it would bring criminal indictments against companies that enter into no-poach as well as wage-fixing agreements. In fact, the DOJ announced such an indictment on January 7, 2021, alleging that two corporations operating outpatient medical care facilities “violated Section 1 of the Sherman Act by reaching naked no-poach agreements with two competitors, pursuant to which they agreed not to solicit each other’s senior-level employees.”

It’s worth noting that, according to Healio, “no-poach or non-solicit agreements may be legal if they are related to legitimate collaborations or business transactions and reasonably necessary for those collaborations or transactions to move forward.” Healio provides some examples of legitimate agreements:

  • Joint venture partners agreeing not to hire or recruit employees involved in the joint venture
  • A business agreeing not to hire or recruit employees with whom the business has come into contact while negotiating or conducting diligence for a transaction
  • The seller of a business agreeing with the purchaser that the seller will not, for a limited period of time, rehire or recruit key employees from the business being sold
  • A business agreeing not to hire or recruit employees whom a consultant has staffed on a project for the business

Related concerns for health care operators

In addition to antitrust concerns, health care companies are facing other compliance challenges. Home health care operators often struggle to comply with the Affordable Care Act (ACA). They typically have high turnover and variable-hour workforces, and have to reconcile visits and hours across multiple systems. As a result, many home healthcare operators have been subject to significant IRS penalties since the inception of the ACA.

For example, a home healthcare operator could miss the ACA compliance requirement to offer coverage to a home healthcare employee. If the employee then claims a Premium Tax Credit, it could trigger an IRS penalty assessment as a result. 

Having a monthly ACA compliance tracking process can help home health care operators avoid such scenarios. Employers wanting to take a proactive approach in light of this news should review their antitrust compliance efforts, with special attention paid to human resources activities. Now’s an excellent time to assess their practices and make any changes needed.

However, this arduous, recurring process can be too time-consuming and risky for the already busy home health care employer to handle internally.

To learn more about how healthcare-related companies (and other types of employers) can achieve full ACA compliance and avoid costly IRS penalties, click here.

For information on ACA penalty amounts, affordability percentages, important filing deadlines, steps for responding to penalty notices, and best practices for minimizing IRS penalty risk, download the ACA 101 Toolkit.

Wage Fixing Indictment Has Implications for Employers
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Wage Fixing Indictment Has Implications for Employers
The Department of Justice’s Antitrust Division is taking a closer look at the competition in labor markets. Employers nationwide, especially health care operators, would be wise to take notice.
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The ACA Times
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Short URL of this page: https://acatimes.com/djc
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