Department of Justice Gets First Guilty Plea in Criminal No-Poach Antitrust Case

Healthcare staffing company VDA OC LLC (“VDA”) recently pleaded guilty to claims that it violated antitrust law by participating in an alleged scheme to limit the wages of nurses. In March 2021, the United States Department of Justice (“DOJ”) filed criminal charges against VDA and a competing contractor. VDA is a healthcare staffing company that provides nurses to the Clark County (Nevada) School District. The DOJ alleged that VDA and its competitor conspired to suppress and eliminate competition by agreeing to allocate nurses and fix nurses’ wages. This guilty plea represents DOJ’s first success in criminal prosecutions of so-called “no-poach” and “no-hire” labor antitrust violations where two or more employers agree not to solicit or hire each other’s employees.

DOJ first filed criminal labor-side antitrust charges in United States v. Jindal in 2020. This followed joint guidance issued in 2016 by DOJ and the Federal Trade Commission (“FTC”). In this joint guidance, DOJ and FTC signaled their intent to pursue potential criminal charges against employers engaging in naked wage-fixing or no-poaching agreements, as they perceived such agreements to restrict competition when not tied to a broader collaboration.

Additionally, the U.S. Department of Labor (“DOL”) entered into a memorandum of understanding (“MOU”) with DOJ earlier this year. The MOU notes DOL’s and DOJ’s shared interests in protecting competition in labor markets and protecting workers who have been or are at risk of being harmed by anticompetitive conduct. The MOU allows DOL to refer to DOJ potential antitrust violations that it uncovers during DOL’s enforcement actions.

To date, DOJ has succeeded in getting courts to acknowledge that no-poach and wage-fixing agreements can be per se violations of the Sherman Act. However, juries in the first two criminal labor antitrust cases, United States v. Jindal and United States v. DaVita, both of which went to trial earlier this year, acquitted defendants of criminal violations.

DOJ continues to pursue criminal charges against companies perceived to engage in no-poach or wage-fixing agreements and to intervene in private litigation to encourage courts to apply antitrust laws to labor markets. The DOL referrals and the guilty plea from VDA may further increase the likelihood that DOJ will pursue more labor-side antitrust investigations.

Dr. Erica E. Greulich is an empirical microeconomist who frequently consults on employment and antitrust matters.