DOJ salary cuts and job mobility fees signal new priority

The Justice Department’s Antitrust Division revealed on January 28 the criminal prosecution of a conspiracy that allegedly suppressed wages and limited job mobility for essential healthcare workers. A federal grand jury in Portland, Maine, made a criminal charge accusing four managers of home care agencies of participating in a conspiracy on the eve of the Covid-19 pandemic to eliminate competition for Personal Support Specialist (PSS) workers.

Notably, the indictment appears to serve several purposes in President Biden’s speech. Executive Decree on Promoting Competition in the U.S. Economy, which seeks to “protect workers from wage collusion”, strengthen “the economic freedom to change jobs or negotiate higher wages” and promote “the good – to be workers.

Employers should keep a close eye on these developments, especially those employing essential workers. As Assistant Attorney General Jonathan Kanter pointed out in the announcement“essential workers risked their health caring for others at the start of the COVID-19 pandemic” and the scheme alleged in this indictment “deprives[d] opportunities to earn better wages.

The charges are part of an “ongoing federal antitrust investigation into the wage setting and assignment of workers in the home health care industry,” suggesting that more action is coming in the industry. In fact, the indictment mentions several unnamed individuals, some of whom “shared management responsibilities” or were “business partners.”[s]with the defendants.

This indictment, when considered in tandem with the DOJ’s other recent wage-fixing and poaching ban lawsuits, impacts all industries and reminds employers to be vigilant in the employee training to avoid even the inference of a conspiracy to suppress wages and restrict the geographic mobility of workers.

The indictment

According to the one-count indictment, the defendants agreed to fix the rates paid to SSP workers and not to hire each other’s labor from April 2020. The conspiracy would have reduced wages and restricted job mobility for these essential workers, who provide personal services. care services for the sick, injured, mentally or physically disabled, elderly and otherwise frail in Portland, Maine and surrounding areas.

To reach these agreements, the defendants allegedly used an “encrypted messaging application”, participated in “virtual meetings” and met in person at the company’s offices. References to virtual meetings and an encrypted messaging app are worth highlighting as examples of the impact of the existence of new communication platforms on investigations and litigation.

The indictment goes on to recount the statements of each of the four defendants who appeared in group messages regarding the setting of rates at $15 and $16 an hour for their essential workers:

“Brothers, everyone agreed that the rate is 15-16” “[W]We agreed on 15 and 16 and I started announcing it” “I signed up and told the employees 15-16” “Yes, that’s the deal. . . . I always go with 15 and 16.”

The indictment also places particular emphasis on government pandemic response programs. For example, effective April 1, 2020, the Maine Department of Health and Human Services increased the reimbursement rate paid to home health care providers by $5.68 per hour to “allow them to fund wage increases for approximately 20,000 personal caregivers.”

According to the antitrust division, the defendants colluded to pocket most of those funds instead of passing them on to essential workers in the form of competitive wages. Additionally, the indictment notes that some of the defendants received loans from the Small Business Administration’s Paycheck Protection Program (PPP), which was established by the CARES Act (Coronavirus Aid, Relief, and Economic Security) in response to the pandemic. The indictment also states that PPP loans were canceled if “a certain portion of the proceeds was earmarked for payroll”.

Alleging that the conspiracy occurred “in the course of and substantially affected interstate trade and commerce,” the indictment states that “PPP loan funds and Medicaid funds traveled from locations outside of Maine to defendants and SSP workers in Maine”.

What businesses need to know

Courts generally consider wage fixing to be illegal in itself and do not recognize defenses against this type of behavior. Arguing that the Sherman Act should not apply to labor markets, or that companies set “fair” or “reasonable” wages, are not viable strategies.

However, prosecutors have yet to prove, beyond a reasonable doubt, that the defendants engaged in an unlawful conspiracy by presenting evidence demonstrating an “agreement of wills” sufficient to constitute an agreement. Such proof need not be direct; this can also be deducted.

Companies need to implement training and review best practices to avoid even the appearance of inappropriate discussions with competitors on labor and employment issues.

Government authorities provide helpful resources for businesses seeking to ensure their employment practices comply with the law, including several “Antitrust red flags.

This article does not necessarily reflect the views of the Bureau of National Affairs, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Write for us: guidelines for authors

Author Information

Henry J. Hauser, former attorney for the Department of Justice and the Federal Trade Commission, is an attorney at Perkins Coie. He also teaches antitrust at the University of Colorado Law School.

Kim Ng is a partner in the Data Privacy and Security Group of Perkins Coie. She advises clients on compliance efforts with national, federal and international privacy laws and regulations.

T. Markus Funka former federal prosecutor, most recently served as chairman of the white-collar investigations firm of Perkins Coie.

About Jessica J. Bass

Check Also

De Montfort University poised for reluctant job losses as cost of living crisis hits funds

De Montfort University has announced that it may have to eliminate 58 positions in an …