Reprinted with permission
from ALA Capital Chapter
HR Connection
Capital Connection
February 2008
HR and Antitrust: What HR nurses. The hospitals, through their HR
Professionals and Legal directors, allegedly exchanged wage and
Administrators Should Know budget information, including the
timing and frequency of wage increases,
through telephone calls, regular associa-
M
embers of the ALA, like tion meetings set up for the express
members of other professional purpose of exchanging this information,
associations, are subject to, and and annual surveys of current and future
thus should have a keen awareness of, wage increases.
the antitrust laws. The following The DOJ alleged that this conduct
provides an overview of the antitrust Some conduct, such as agreements to fix resulted in smaller increases of wages
laws and cases most relevant to HR prices, boycott competitors, or to divide and promoted interdependent wage
professionals and legal administrators, territories or customers, is illegal per se – setting strategies between the hospitals.
and provides some practical advice for which means such conduct is always The case was settled by a consent order
reducing risks. unreasonable, regardless of the justifica- that, among other things, prohibited the
tion. But the legality of other conduct, defendants from engaging in this type of
THE BASICS such as information exchanges, depends conduct, restricted their ability to
The purpose of antitrust laws is to on whether the pro-competitive benefits participate in wage surveys, and re-
protect consumers by encouraging and outweigh the anticompetitive harm. quired them to submit annual compli-
preserving competition. The underlying This, in turn, depends on several factors, ance reports to the DOJ.
theory is that competition leads to such as the effect of the restraint on In Todd v. Exxon, plaintiffs brought a
innovation, efficiency, and, ultimately, prices, quality, or output. class action against fourteen oil compa-
lower prices, higher-quality products or Both federal and state governments, as nies that allegedly conducted detailed
services, and greater output. Broadly, the well as private parties, can bring anti- wage surveys about current and future
antirust laws make it illegal to unreason- trust suits. If successful, penalties for compensation, benefits, bonuses, entry
ably restrain competition, attempt to violations can be severe. For criminal wages, and job responsibilities by pay
acquire or use monopoly power, or violations, individuals can face fines up grade. The oil companies allegedly
engage in unfair methods of competi- to $1 million and jail time of up to ten shared the information with one an-
tion. Importantly for human resource years; corporations can be fined up to other, their HR personnel met regularly
professionals, the laws apply to services $100 million or, if greater, twice their ill- to exchange this information, and the
as well as goods, and to purchasing as gotten financial gain or twice the loss surveys were not made public. Plaintiffs
well as selling. suffer by consumers. Additionally, claimed that this resulted in artificially
For associations, one of the most plaintiffs in civil litigation can recover low salaries and slower job advance-
important antitrust statutes to be aware three times their damages, which can ment.
of is Section 1 of the Sherman Act, a easily cost companies millions. The cost Although the district court dismissed
federal statute that prohibits contracts, of defending suits alone can be massive, the case, the appeals court reversed,
combinations, or conspiracies in let alone the harm to individual and firm finding that the information exchange
restraint of trade. A Section 1 violation reputations. could have violated Section 1 of the
arises when two or more companies Sherman Act. The appellate court
agree to engage in conduct that unrea- HR CASES explained that the information exchange
sonably restrains competition that So how does antitrust law affect HR must be analyzed in light of market
affects interstate commerce. professionals, legal administrators, and structure and the nature of the informa-
An agreement can take various forms, associations? The following cases show tion exchanged.
from an explicit agreement to an implied that HR professionals can be swept into With respect to market structure, a
one. an antitrust case when they share highly-concentrated market with few
A “wink and a nod” may be enough. information about current or future participants that have market power to
Associations must be particularly careful compensation and benefits. affect prices makes it more likely that
because they often include competitors For example, in United States v. Utah the exchange will harm competition.
among their members, and courts Society for Healthcare Human Resources Even where there are a large number of
sometimes construe their activities to Administration, the Department of industry participants, however, the court
constitute joint conduct by their very Justice (“DOJ”) charged two associations said that information exchanges can still
nature. and eight hospitals with conspiring to be illegal.
Whether a restraint is unreasonable exchange non-public current and future
generally is analyzed in one of two ways. wage information about registered continued on next page
24 ALA Capital Chapter CAPITAL CONNECTION February 2008
With respect to evaluating the propriety of the information,
)
itself, the court highlighted these factors: (1) the time-frame LAW FIRM
of the information – exchanges of current and future prices
(i.e., compensation), as opposed to historical information, are
GREEN
The New Black
especially problematic; (2) the specificity of the information he business case for going green is increasingly clear, where green
(e.g., employee specific by firm vs. average salary among T goes, so goes the bottom line.
In addition to its physical footprint, a firm also has a great opportunity
several firms) – the more detailed the information, the greater to have a positive environmental impact through green policies which
risk of liability; (3) whether the information is made publicly modify the behavior and attitudes of its workers.
available – making survey results public enables the data to So what is a green workplace, anyway? For the answer to that and
serve potentially pro-competitive uses; and (4) how frequently other questions, attend this half day seminar and learn how you can
start the conversation toward implementing green policies.
the information is shared – frequent exchanges are riskier
Date & Time February 20, 8:15 am–1:00 pm
because they allow participants to police improper agree- Location Arnold & Porter LLP, 555 12th Street, NW
ments. Registration Fees Members $50, Non Members $75
Finally, in 2006, several class actions were filed by registered KEYNOTE SPEAKER: Alvidas Jasin of The Climate Project
nurses against hospitals for alleged antitrust violations. Alvidas Jasin is one of Al Gore’s army of 1,000 trained volunteers and
messengers of change on the climate crisis.
Plaintiffs alleged, among other things, that hospital HR staff
exchanged current and future compensation information at Moderator: David Brown, Editor in Chief, Legal Times
job fairs, over the telephone, and association meetings. These
cases are ongoing. Achievable Green Initiatives
PANELISTS
SOME PRACTICAL ADVICE Architectural Perspective to Designing Green
Sally Wilson • Global Director of Environmental Strategy • CB Richard Ellis
Of course, lots of HR and law firm administration topics are
Sustainability in the Construction Process
unlikely to raise antitrust issues, and firms can receive market Kim Pexton • Director of Sustainable Construction • HITT Contracting, Inc.
information lawfully from press and other public sources. Still, Case Study: Mobilizing to “Go Green”
other activities, including those carried out through associa- Carolyn Kaplan • Counsel, Chief Sustainability Officer • Nixon Peabody LLP
tions, can raise antitrust risks. Associations, HR professionals, Case Study: A Practical Implementation
Jonathan Martel • Partner • Arnold & Porter LLP
and legal administrators can take many steps to reduce those
risks. For example:
Register online at
▼ Don’t share current or prospective compensation (salary, www.alacapchap.org
bonus, or benefits) or other competitive-sensitive infor-
mation without prior advice of an antitrust counsel.
▼ Don’t discuss allocating clients or services, dividing
territories, or boycotting customers and vendors.
▼ Establish an antitrust policy and distribute the policy to
members.
▼ For meetings, prepare an agenda that comports with your
antitrust guidelines, keep minutes that are reviewed by an
attorney in draft, and interrupt any speakers who veer
into inappropriate topics.
▼ Always be vigilant about what is put in writing, taking
care to avoid any ambiguity that could suggest an im-
proper discussion or course of conduct.
▼ Be careful when conducting compensation surveys.
Generally, compensation surveys are fine if they are
managed by an outside third party (e.g., a consultant or an
association where survey staff are not affiliated with any
association member), the data are more than three months
old, there are five or more respondents, no single
respondent’s data represents 25% or more of a data point,
and the data are aggregated.
▼ And, of course, when in doubt, always seek advice from
an antitrust attorney.
This information is provided as a general educational service to
ALA members. It should not be construed as imparting legal
advice on any specific matter.
Alexis J. Gilman is an associate and David R. Brenneman is a law
clerk at Morgan, Lewis & Bockius LLP in Washington, D.C. The
authors would like to thank Willard K. Tom, partner, at Morgan,
Lewis & Bockius LLP for his assistance.
25 ALA Capital Chapter CAPITAL CONNECTION February 2008