According to published reports, the COVID-19 emergency has caused significant staffing challenges at hospitals, clinics, and nursing homes in many parts of the country.  In addition to staffing shortages, some health care companies have seen steep increases in prices charged by staffing companies for the services of nurses, doctors, and other workers at the front lines of the pandemic.

Some employers of essential health care providers may be tempted to respond to these challenges by exchanging price or salary information with competitors, agreeing with competitors to limit compensation, or pledging not to hire a competitor's employees.  That would be a dangerous strategy. 

Last week, the top U.S. antitrust enforcers at the Federal Trade Commission and Department of Justice issued a warning that they are "on alert" to enforce the antitrust laws against "those who seek to exploit the pandemic to engage in anticompetitive conduct in labor markets."  In general, the nation's antitrust laws prohibit agreements between employers to limit competition for workers on the basis of compensation, benefits, hours worked, and other terms of employment.  The new warning from DOJ and FTC signals that the usual antitrust rules apply to labor markets, even in a time of crisis.

This post describes steps health care companies should consider to minimize antitrust risk as they address staffing challenges caused by the COVID-19 emergency.

Warning from DOJ and FTC on Competition for Workers at the Front Lines of the Covid-19 Emergency

In joint statement on April 13, top enforcers at FTC and DOJ announced that their agencies are "closely monitoring" competition for essential workers and first responders.

Assistant Attorney General Makan Delrahim said that the DOJ "will not tolerate companies and individuals who use COVID-19 to harm competition that cheats payroll and non-payroll workers."

"This includes doctors, nurses, first responders, and those who work in grocery stores, pharmacies, delivery and distribution networks, and warehouses, among other essential service providers on the front lines of addressing the crisis," said Delrahim.  "Even in times of crisis, we choose a policy of competition over collusion."

The joint statement by FTC and DOJ affirms the agencies' longstanding approach to applying antitrust to labor markets. For years, the agencies have challenged wage-fixing and no-poach agreements, as well as certain non-compete agreements.  The agencies have also taken action in response to the improper sharing of employee salary and benefit information by competing employers.  According to DOJ, criminal prosecution may result from certain "naked" wage-fixing or no-poach agreements.

Polsinelli's antitrust department previously covered a March 24 statement by FTC and DOJ which signaled that the antitrust enforcement agencies may adopt a relaxed standard when assessing joint conduct that is "limited in duration" and "necessary to assist patients, consumers, and communities affected by COVID-19 and its aftermath."  The new statement clarifies that the agencies do not consider agreements that reduce competition for essential workers as a permissible response to the pandemic.

Takeaways for Health Care Companies and Other Employers of Essential Workers

  • Review Your Company's Antitrust Compliance Program, Including Training for Human Resources Employees:  Based on guidance issued last year by DOJ, we have previously advised employers (including health care companies) to consider including regular training for human resources professionals on antitrust compliance as part of their overall antitrust compliance programs.  Companies that have not already implemented such training should consider rolling it out now for the employees responsible for staffing emergency rooms, nursing homes, and other facilities on the front lines of the pandemic.  Where possible, this training should be conducted live or by video conference and cover the key elements of recent guidance from the agencies, including the Antitrust Guidance for Human Resource Professionals issued by FTC and DOJ.  Companies should also check that their antirust compliance programs include other key elements likely to reduce risk and minimize sanctions in the event of a violation, according to DOJ guidance.  These elements include a mechanism for employees to ask questions or report problems without fear of retribution, appropriate monitoring of high-risk employees, incentives and discipline to deter violations, and a written policy that clearly articulates the company's internal policies and procedures related to antitrust compliance.  Our article on the key elements of an effective antitrust compliance policy can be accessed here.
  • Price-Gouging Laws May Apply:  In some states, price-gouging laws apply only to the prices of essential goods — and to not services — during a declared emergency.  We previously covered how these laws apply to the COVID-19 emergency here.  However, in some states, price-gouging laws do prohibit increases in the price of certain essential services.  As a general matter, these laws only apply where the price increases are significant and not driven by increases in the cost of labor (i.e., higher wages for essential workers).  Antitrust counsel can help health care companies explore whether price-gouging laws may constrain prices for essential workers in the state(s) where they operate.
  • Working with Competitors to Lobby the Government Is Likely Permitted:  Subject to appropriate antitrust safeguards, health care companies can also work together to lobby or petition the government for help with staffing challenges caused by the COVID-19 emergency.  Depending on the scope of lobbying efforts, companies may need to adopt safeguards to limit the exchange of competitively-sensitive information and to ensure that the collaboration remains focused on legitimate lobbying and petitioning efforts.  Antitrust counsel can help companies develop appropriate safeguards.

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.