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AG Frey Joins Coalition of 18 AGs Urging Regulators to Protect Workers from Harmful Anticompetitive Labor Practices
July 16, 2019
AUGUSTA - Attorney General Aaron M. Frey today joined a coalition of 18 states in submitting comments to the Federal Trade Commission (FTC) urging collaboration between regulators to protect workers from anticompetitive labor practices that depress wages, limit job mobility, and limit opportunities for advancement. In an official comment letter submitted in connection with the FTC's hearings on competition in the 21st century, the Attorneys General argue that regulators should increase their focus on antitrust enforcement in the labor market and use their authority to crack down on harmful practices - like anticompetitive non-compete and no-poach contract agreements - in addition to considering how workers are impacted by proposed mergers. The comments highlight recent efforts by state Attorneys General to crack down on anticompetitive activity and identifies areas for future state and federal collaboration in antitrust work around labor issues.
"It is important in a constantly changing economy for workers to be able to advance their careers, develop professionally, and seek better compensation when there are opportunities to do so," said Frey. "Non-compete clauses and no-poach contract agreements are frequently used against workers to depress wages and limit mobility. In fact, Maine took significant action this year to prohibit non-compete agreements for certain workers. The FTC should follow suit ban these practices for low-wage workers and also examine how mergers impact our workforce."
Antitrust laws work to protect competition in markets that benefits consumers and workers. These laws also work to prevent harmful practices such as monopolization, price-fixing, and market allocation, which can result in higher prices, depressed wages, decreased supply of products, or lower quality products and services. State Attorneys General and the FTC have a strong interest in protecting the competitiveness of markets and can work independently or collaboratively to take enforcement action to stop antitrust law violations.
Antitrust enforcers are increasingly considering how mergers impact labor markets. State Attorneys General have been active in bringing enforcement actions against companies who impose restrictive contract agreements that limit workers' ability to obtain competitive wages and benefits.
Recent antitrust actions brought by state Attorneys General have also confronted labor issues. In March 2019, a coalition of 14 Attorneys General secured a settlement with four fast-food chains to stop using no-poach agreements, which prevent employees from leaving one fast food franchise to work for another franchise in the same chain. These restrictive agreements prevent low-wage workers from pursuing better paying jobs and deny franchisees the opportunity to hire skilled employees of their choice. Several Attorneys General joined similar settlements with a fifth chain in July 2019.
In their comments, the Attorneys General urge the FTC to consider the following labor considerations in antitrust matters:
Impact of company mergers on workforce: Antitrust enforcement should consider whether merging companies have specialized workforce needs and/or are within the same geographic area with a small workforce. A merger with either of these factors could result in fewer jobs and limited ability for specialized workers to switch to other types of work. If it seems like one of these labor market conditions could apply, enforcers could gather information from the human resources departments of the merging companies and competitors to better understand the labor needs and hiring practices that might occur.
Effect of non-compete, non-solicitation, and no-poach agreements on worker job mobility: These types of agreements can limit the job mobility of workers. Non-compete agreements prevent employees from seeking work with a competing company. Non-solicitation agreements prohibit employees from soliciting employees of their current employer to move with the employees to a new job and may effectively act as a non-compete agreement. Certain types of no-poach agreements prevent employees from leaving one franchise to pursue a better job at another franchise in the same chain. Because of this harm, the letter urges the FTC to ban non-compete agreements for low-wage workers, as many states have done, and intra-franchise no-poach agreements.
The FTC's recent series of hearings over the past months have been a useful and welcome dialogue on antitrust issues facing today's government antitrust enforcers. The Attorneys General's Comments emphasize the importance of advancing antitrust enforcement to protect workers in today's rapidly evolving economies and collaborating with the FTC to do just that.
The comment letter was led by District of Columbia Attorney General Karl Racine and joined by the Attorneys General from California, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and Washington.