Is your business keeping up with the changing rules of workplace competition? Although the Biden-era Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) pursued initiatives aimed to upend common law workplace mobility restraints, the status of those initiatives was paused and will potentially be derailed.
On Jan. 16, 2025, federal regulators released new guidelines that could affect everything from how employers hire and pay workers to how employers structure training agreements and franchise relationships. Whether employing traditional workers, using independent contractors, or both, these initiatives posed changes to day-to-day operations and created new risks for certain workplace restraints. Yet, on Mar. 7, the FTC switched course and requested that the federal courts deciding the fate of these initiatives pause those cases while the agency reconsidered its stance on non-competition covenants in the employment realm.
Where we were:
In 2016, the FTC and DOJ issued their Antitrust Guidance for Human Resource Professionals to educate those involved in hiring and compensation decisions about the potential antitrust risks associated with their job responsibilities. This guidance focused on the well-established antitrust risks of three H.R. related business activities:
- No Poach / No-Hire / Non-Solicitation Agreements: Agreements with individual(s) at another company to refuse to solicit or hire that company's employees can violate the antitrust laws. These include no-hire contractual provisions which can far exceed the scope of what is actually relevant to that contract.
- Wage Fixing Agreements: Agreements with individuals at another company about employee salaries or other terms of compensation, either at a specific level or within a range, can violate the antitrust laws.
- HR Information Sharing / Benchmarking: Information exchanges between employers about employment terms, conditions, compensation or hiring can violate antitrust laws. Even without an explicit agreement to fix wages or employment terms, sharing sensitive employment information could be interpreted as evidence of an illegal implicit agreement or have anticompetitive effects on the labor market. However, under the 2016 guidelines, certain hiring, wage and information could be shared between employers if the information was shared pursuant to the DOJ's "safe harbor" conditions as sufficiently old, aggregated, and anonymized.
Where we are:
On Jan. 16, 2025, right before President Trump's inauguration, the FTC and DOJ's Antitrust Division replaced the 2016 Guidance with its Antitrust Guidelines for Business Activities Affecting Workers (2025 Guidance). This comprehensive update significantly expands the reach of its 2016 predecessor, reflecting evolving enforcement priorities and addressing a broader range of labor-related practices.
The 2025 Guidance restates that agreements between employers not to hire each other's workers (no-poach agreements) or to fix wages remain subject to criminal prosecution. However, it also covers several additional key areas:
Franchise Relationships
The 2025 Guidance clarifies that anti-competitive labor restrictions in franchise agreements may violate the antitrust laws. This extends to situations where franchisors and franchisees agree not to compete for workers.
Worker Mobility Restrictions (e.g., non-compete clauses)
The guidance addresses how non-compete clauses and similar restrictions on worker mobility may violate both antitrust and other applicable laws. While acknowledging that a federal district court in Texas invalidated the FTC's 2024 noncompete ban, the guidance emphasizes the FTC's position that it maintains continuing authority to challenge such agreements through case-by-case enforcement.
Information Sharing Practices/ Benchmarking
The DOJ withdrew its support for its long-standing information sharing "safe harbor" in Feb., 2023. Under the 2025 Guidelines, exchanging any sensitive information about compensation or employment conditions with another company, whether directly or through third parties or algorithms, could violate the antitrust laws.
Agreements relating to Independent Contractors
The 2025 Guidelines emphasize that the antitrust laws protect both traditional employees and independent contractors from anti-competitive practices, including in modern platform-based businesses where contractors are often used instead of employees. As the 2025 Guidelines warn, agreements between companies involving hiring or compensating independent contractors risk committing serious antitrust violations that could result in criminal charges.
Additional Problematic Practices
The 2025 Guidelines identify several other potentially problematic business activities, including:
- Overly broad nondisclosure agreements that effectively prevent job changes or reporting violations
- Requirements for workers to repay training expenses
- Mandatory damage payments to employers upon departure
- Deceptive statements about potential earnings
What's Next:
The Jan. 2025 guidelines embody a significant expansion of federal antitrust oversight in labor markets, formalizing many positions developed through recent enforcement actions and legal proceedings. And while it is unclear whether and to what extent these guidelines will be adopted and enforced by the new administration, they do reflect the position of many Attorneys General and private litigants.
In its latest Mar. 7, 2025 legal maneuver, the FTC filed requests with the Fifth and Eleventh Circuit Courts of Appeal where lawsuits challenging the FTC non-compete rule are pending, seeking an extension of time in those proceedings to reconsider whether to continue to defend its rule generally barring non-competition covenants.
Notwithstanding, the Trump Administration has already taken action to replace Biden-era FTC appointees and scale back the previous administration's worker-friendly policies, guidance, and objectives. Likewise, the Trump Administration replaced the General Counsel at the National Labor Relations Board, which also issued agency guidance during the Biden era to treat non-compete covenants and other confidentiality obligations as a violation of the National Labor Relations Act. And since replacing the General Counsel of the NLRB, the NLRB has rescinded much of the Biden era guidance on this topic thereby reversing its prior agency activism and rules.
But while there was a Mar. 7, 2025 litigation pause regarding non-competes, the new antitrust enforcers have not closed the book on HR-related antitrust enforcement. Under new FTC Chair Andrew Ferguson, the agency launched a Joint Labor Task Force to prioritize investigations into anticompetitive labor practices such as no-poach agreements, non-competes, wage-fixing, and deceptive job advertising.
And regardless of federal enforcement, the threat of state enforcement and costly litigation has not changed. For example, in Apr. 2025, a federal judge allowed a class-action lawsuit against Burger King to proceed, alleging that the company used "no hire" agreements to suppress wages and restrict employee mobility among its franchises.
In summary, while the federal government is in flux, the FTC, DOJ, and others continue to prioritize antitrust enforcement in labor markets, signaling a sustained commitment to addressing anticompetitive practices affecting workers.
At this point, we recommend companies take the following steps:
- Assess: Take steps to assess whether the company is engaging in any of the above business activities which could be presenting antitrust risk.
- Seek Guidance: Consult antitrust counsel to discuss whether and to what extent these business activities are actually presenting antitrust risk and should be modified or eliminated.
- Implement Training: In order to help mitigate antitrust risk going forward, teach relevant employees about the potential risks of the above business activities and require that they seek legal review prior to engaging in them. Nelson Mullins has an e-training module on this topic which can be quickly customized and deployed in companies of any size.
The landscape of workplace competition rules is evolving rapidly, and staying ahead of these changes is crucial for one's business. While there's uncertainty about how aggressively these guidelines will be altered, amended, or enforced under the new administration, they could maintain and possibly increase scrutiny of workplace practices by both federal and state regulators. Now is the time to review business practices with workers, contractors, and business partners to ensure they align with these new expectations. Remember: the best defense is a proactive approach - assess corporate practices and policies, consult with legal counsel, and ensure your team is trained on these important changes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
