ANTI-TRUST LAW IN THE
WORKPLACE

Telephone
calls
and
other
direct
communication about wage and benefits
between local HR professionals working at
employers in the same industry in the same
geographic area;

The existence of similar compensation
levels for similar employees at different
employers in the same geographic area.
John T. Lovett
On June 20, 2006, America’s fastest growing
union, the SEIU, launched a creative new organizing
weapon: anti-trust challenges to employer pay
practices. The SEIU sponsored lawsuits charge
targeted employers in Chicago, Memphis, San
Antonio, and Albany, New York, with “price fixing”
in setting their wage and benefit levels.1 These class
action Complaints identify employer use of such
common HR tools as wage and benefit surveys as
circumstantial evidence of anti-trust violations.2
Labor and anti-trust law have long been
intertwined. Use of wage and benefit surveys, and
other employer tools for comparing market wage and
benefit levels, are subject to anti-trust challenge. Yet,
unions may also run afoul of anti-trust laws.
Persistent “corporate campaigns” and the recent
“Employee Free Choice Act” illustrate that the labor
movement is determined to play by new legal and
organizing rules. To avoid responding to today’s
union organizing strategies with yesterday’s
techniques, employers need good defenses to unionsponsored, anti-trust lawsuits. Employers should also
know the signs of “corporate campaign” tactics that
may violate federal anti-trust rules. Employers need
both an anti-trust “defense” and an anti-trust
“offense” to respond to today’s non-traditional union
organizing.
Defenses to Anti-Trust Challenges To Pay
Practices. The SEIU’s anti-trust class actions target
hospitals. Yet, unions could make similar allegations
against almost any employer in almost every segment
of the U.S. economy. At their core, the SEIU’s antitrust claims find their basis in the following HR
practices:

Participation in wage and benefit surveys;

Discussions about wages and benefits at HR
and trade association meetings;
How could such common HR practices be illegal?
The answer is found in the “fine line” anti-trust law
draws between pay practices designed to ensure
competitive compensation versus information sharing
evidencing unlawful wage and benefit “price fixing.”
Employers
As
“Competitors”
For
Employees. Anti-trust law treats employers as
competitors competing to purchase the services of the
available workforce at the best price. Wages and
benefits are the price of employees’ services.
Competition bids up the “price” (wages and benefits)
employers are willing to pay for these services.
The Sherman Anti-Trust Act3 forbids any
agreement or any other type of joint conduct that
“unreasonably restrains” this competition. Express or
implied agreements between employers that fix, peg,
or stabilize wages or benefits are per se violations of
the Sherman Act. No business justification excuses
such an express or implied agreement to “fix the
prices” of wages or benefits. Anti-trust rules,
however, reach beyond actual agreements to fix
wages and benefits. They outlaw any concerted
action between employers that tends more to restrict
than to promote wage and benefit competition.
All exchanges of wage and benefit information
among employers are subject to this anti-trust
scrutiny. Anti-trust regulators and the courts believe
employer knowledge of what their competitors are
willing to pay for labor, under some circumstances,
restrains employer competitive bidding for labor.
Employers need to know what sharing of wage and
benefit information will expose them to anti-trust
liability.
John T. Lovett, author of this Legal Alert, practices labor and
employment law with Frost Brown Todd LLC. out of its offices in
Louisville, Cincinnati, and Nashville. John is the current
Chairperson of CUE’s Labor Lawyers Advisory Committee. He is
listed in The Best Lawyers in America, and is a Charter Member of
the American Employment Law Council. The Labor Relations
Institute named John one of the "Top 100 Labor Attorneys" in the
U.S. in recognition of his success in defending employers in union
organizing campaigns.
1
Reed, et al. v. Advocate Healthcare, et al., No. 06-CV03337 (N.D. Ill. June 20, 2006); Clark, et al. v. Baptist
Mem’l Healthcare Corp., et al., No. 06-CV-02377-JMPDKV (W.D. Tenn. June 20, 2006); Maderazo v. Vanguard
Health Sys., et al., No. 06-CV-00535-OLG (W.D. Tex.
June 20, 2006); Unger v. Albany Med. Ctr., et al., No. 0600765 (N.D. N.Y. June 20, 2006).
2 Id.
3
15 USC § 1.
Wage and Benefit Surveys. The most common HR
practice likely to come under anti-trust scrutiny is
participation in wage and benefit surveys. Not all
wage and benefit surveys violate anti-trust law. In
fact, the U.S. Department of Justice acknowledges
that wage and benefit surveys sometimes act to
promote competition.4 To help employers separate
pro-competitive wage and benefit surveys from those
that may be anti-competitive, the U.S. Department of
Justice and the Federal Trade Commission (FTC)
have announced an “Anti-Trust Safety Zone” for
wage and benefit surveys.
The “Anti-Trust Safety Zone” is found in the
Justice Department’s and FTC’s joint “Statements of
Antitrust Enforcement Policy and Health Care.” 5
Nevertheless, the anti-trust principles embedded in
the “Safety Zone” apply to all segments of the
economy. Accordingly, the “Safety Zone” is widely
considered applicable beyond the healthcare industry.
The “Anti-Trust Safety Zone” establishes three
criteria that wage and benefit surveys must meet in
order to qualify for the “safety zone.” These are:
“1. The survey is managed by a third party
(e.g. a purchaser, government agency,
healthcare
consultant,
academic
institution, or trade association);
2.
The information provided by survey
participants is based on data more than
3 months old; and
3.
There are at least five providers
reporting data upon which each
disseminated statistic is based, no
individual provider’s data represents
more than 25% on a weighted basis of
that statistic, and any information
disseminated is sufficiently aggregated
such that it would not allow recipients
to identify the prices charged or
compensation paid by any particular
provider.”6
The “Anti-Trust Safety Zone” does not
guarantee that a wage and benefit survey complies
with anti-trust law.
It does not insulate a
participation from anti-trust litigation. Yet, the U.S.
Department of Justice represents that, “absence
extraordinary circumstances,” neither the Justice
4
Statement of Antitrust Enforcement Policy in Health
Care, Statement 6 – Provider Participation In Exchanges of
Price and Cost Information (August 1996) p. 49, available
at www.usdoj.gov\atr\public\guidelines\ 0000.htm.
5 Id.
6 Id.
Department nor the FTC will challenge an
employer’s participation in a survey meeting the
“Safety Zone’s” criteria.7 Further, since the “Safety
Zone” reflects judicial interpretation of federal antitrust law,8 a private plaintiff is unlikely to win an
anti-trust lawsuit based solely upon an employer’s
use of a wage and benefit survey qualifying for the
“Safety Zone.”
Other Exchanges of Wage and Benefit
Information. Surveys are, of course, not the only
means by which employers can obtain wage and
benefit information. Direct exchanges of wage and
benefit information between employers presents the
greatest anti-trust danger. Even direct exchanges,
however, are not automatically illegal. 9 Yet, direct
exchanges of wage and benefit information create
circumstantial evidence of wage “price fixing.” This
is particularly true if the information exchanged is
current and specific.10 Among the allegations made
in the SEIU’s 2006 anti-trust litigation is that HR
professionals exchanged wage and benefit
information at local trade association and HR
professional meetings. This is why CUE adopts a
strict policy against sharing at any of its meetings and
conferences any information that may run afoul of
anti-trust laws.11
What To Do. Make sure your wage and benefit
market research will pass anti-trust scrutiny. Obtain
credible assurance that any wage and benefit surveys
used fall within the “Anti-Trust Safety Zone.” If in
doubt, obtain advanced regulatory review of the
survey. The Justice Department offers an “expedited
business review procedure,”12 and the FTC13 offers
an advisory opinion procedure.14 Make sure that the
7
Id.
The “anti-trust safety zone” addresses federal anti-trust
law. Many states also have anti-trust laws applicable only
within its jurisdiction. Employers should check with their
labor law counsel to determine how state anti-trust laws
may impact their labor and employment practices in the
states where they operate.
9 United States v. Citizens & Southern Nat’l Bank, 422
U.S. 86, 113 (1975); Todd v. Exxon Corp., 275 F.3d 191,
214 (2nd Cir. 2001)(exchanging compensation information
may “enhance competition by making competitors more
sensitive to each other’s price changes, enhancing rivalry
among them.”).
10 See, e.g., Todd v. Exxon Corp., 275 F.3d 191, 212-13
(2nd Cir. 2001).
11 For a copy of CUE’s Antitrust Statement contact the
CUE office. The policy is also included with all CLE
Conference Materials.
12 58 Fed. Reg. 6132 (1993).
13 16 C.F.R. §§ 1.1-1.4 (1993).
14 The U.S. Justice Dept. and the FTC represent that they
will provide employers with an answer to whether a
8
trade association and human resources meetings you
attend diligently prevent any discussion of wages or
benefits that might create circumstantial evidence of
anti-trust violations. Avoid any direct discussion of
wages and benefits with HR colleagues who work for
other employers hiring the same types of employees.
Such diligence provides the best defense against a
union anti-trust attack upon your company.
An Anti-Trust “Offense.” Anti-trust laws also
offer employers a strategic “offense” against union
“corporate campaign” tactics.15 Traditional union
concerted activity, among unions and union
members, is exempt from federal16 and state17 antitrust laws. “Corporate campaigns,” however, seldom
use traditional union tactics. Employers need to
understand the rationale and limits of the union antitrust exemption in order to know when anti-trust laws
may offer an offensive strategy against a union
“corporate campaign.”
The Union Anti-Trust Exemption. Congress
long ago determined that workers, as sellers of labor
(in contrast to employers as buyers of labor), should
be free to join together to end competition over the
“price” (wages) for their services.18 Support for this
“collective bargaining process” is the rationale for
labor’s anti-trust exemption.19 Accordingly, when
unions join with others to eliminate competition over
particular survey complies with anti-trust law within 90
days after the employer submits all necessary information
to the Justice Dept. or the FTC.
15 For an insightful treatment of available legal challenges
to union corporate campaigns, to which this article owes
much, see, Fletcher, The Corporate Campaign – Labor’s
Ultimate Weapon or Suicide Bomb? 65 North Carolina Law
Review 85 (1986-1987).
16 Sections 6 and 20 of the Clayton Act, 15 U.S.C. § 17
and 29 U.S.C. § 52; Norris-LaGuardia Act, 29 U.S.C. §§
104, 105 and 113; See also, United States v. Hutcheson,
312 U.S. 219 (1941).
17
Federal preemption of the entire labor law field
prevents application of state anti-trust laws to labor unions,
under any circumstances. Connell Constr. Co. v. Plumbers
Local 100, 421 U.S. 616, 620 & 635 (1974).
18
Congress pass the Clayton Act in 1914 largely in
response to court decisions holding that the Sherman AntiTrust Act outlawed many union activities as unreasonable
“restraints of trade.” 15 USC § 17.
19
Sections 6 and 20 of the Clayton Act, 15 U.S.C. § 17
and 29 U.S.C. § 52; Norris-LaGuardia Act, 29 U.S.C. §§
104, 105 and 113; See also, United States v. Hutcheson,
312 U.S. 219 (1941) (statutory exemption); Meat Cutters v.
Jewel Tea Co., 381 U.S. 676, 689-690 (1965). Otherwise,
some provisions in collective bargaining agreement would
violate anti-trust laws. See, Jewel Tea, supra at 689-690
and 709-720, 732-733; Mineworkers v. Pennington, 381
U.S. 657, 664-665 (1965); Brown v. Pro Football, Inc., 518
U.S. 231, 240-242 (1996)(non-statutory exemption).
anything other than wages and working conditions,
unions often step outside their anti-trust exemption.20
They become subject to anti-trust laws.
What To Watch For. Both anti-trust laws and
Labor’s anti-trust exemption are confusing even to
the courts. We cannot set out all the legal parameters
here. Certain “sign posts,” however, point to the
potential for union anti-trust liability. When you see
these “sign posts,” call them to your labor lawyer’s
attention. You may have a powerful anti-trust
“offensive strategy” against a union corporate
campaign.
Union Action With Non-Unions. Only unions
have a role to play in controlling competition over
wages and other working conditions. For this reason,
union alliances with entities other than unions –
particularly businesses – are an important “sign post”
to union anti-trust liability.21 For example, in
corporate campaigns unions may conspire with
distributors to keep to a union-free manufacturing
firm from selling its products in a particular market.
A union may “persuade” a group of doctors not to
refer patients to a union-free hospital. A union may
unite with local retailers to keep a national chain
from getting a lease in a shopping center. A union
may pressure a bank not to finance a union-free
enterprise. In each example a union is uniting with a
non-union entity to take action that may restrain
trade. Both the union and its co-conspirator may
incur anti-trust liability.
Importantly, a Union may violate anti-trust laws
even if the non-union entity’s “cooperation” with the
union is involuntary. In Connell Construction Co. v.
Local 100,22 the U.S. Supreme Court approved a
federal anti-trust lawsuit against a union that picketed
a contractor until the contractor agreed to do business
with only union subcontractors. The Supreme Court
found that the union stepped outside its anti-trust
exemption because it sheltered the employers of its
members from outside competition. The Supreme
Court exposed the union to anti-trust liability even
though the union’s purpose was “to support its
organizing campaign.”23
See, National Ass’n of William and Children’s Apparel
Salesmen, Inc. v. FTC, 479 F2d. 139, 144 (5th Cir.) cert
denied, 414 U.S. 1004 (1973); Great Atlantic & Pacific Tea
Co. v. Amalgamated Meat Cutters & Butcher Workmen
Local 88, 410 Fed 3d 650, 653 (8th Cir.) (1969).
21 See, e.g., Allen Bradley Co. v. Local Union No. 3, 325
U.S. 797, 809-810 (1945); Great Atlantic & Pacific Tea
Co. v. Amalgamated Meat Cutters & Butchers Workmen
Local 88. 410 F2d 655, 653 (8th Cir.) (1969).
22 421 U.S. 616, 623 – 625 & 635 (1975).
23 Id. at 623.
20
Union Pressure On Others To Pressure You.
Connell Construction Co. v. Local 100 points to
another important “sign post” of union anti-trust
liability. Many courts have found anti-trust exposure
where unions use “secondary” pressure to persuade
others to cease doing business with the true target of
the union’s tactics.24 The National Labor Relations
Act also outlaws most such “secondary” pressure.25
The U.S. Supreme Court has ruled, however, that the
NLRA is not the exclusive remedy where a union
violates anti-trust laws with actions that could also
violate the National Labor Relations Act.26
Employers need to be alert for “secondary” union
pressure upon customers, suppliers, distributors,
sources of financing and desirable real estate. Such
“secondary” pressure may create union anti-trust
violations.
Violence As An Anti-trust Violation. Recent
years have seen employer attempts to address union
violence through RICO litigation. When union
members join together in an effort to prevent the sale
of a target company’s goods or services through
violence, however, they are also subject to anti-trust
liability.27
Permitted Union Actions With Non-Unions.
Not all union actions with non-union groups violate
anti-trust laws. Unions are always free to unite with
other groups in order to influence governmental
bodies.28 The NLRA authorizes unions to obtain
agreements that permit only union laborers on a
specific construction job site.29 Agreements among
employers and unions for purposes of facilitating
collective bargaining are always exempt from antitrust laws.30
The Big Picture. In the “big picture” of union
organizing, anti-trust litigation can have an impact
beyond the pressure it places on employer or union.
Mere media coverage of a lawsuit charging an
employer with a conspiracy to suppress wages can
create employee suspicion of their employer that is
ideal for traditional union organizing. On the other
hand, newspaper headlines announcing a lawsuit
against a union and it co-conspirators for blocking
competition tells the story of unions causing higher
prices and less selection, for the benefit of the union
but at the expense of everyone else. The adversarial
relationship unions bring to the workplace costs
employers, employees, and customers alike. Like
CUE membership, having an anti-trust “defense” and
“offense” can help employers avoid this needless
“adversarial relationship cost.” This benefits
everyone.
___________________________________________
The CUE Legal Alert is published quarterly by CUE to
communicate legal developments in the labor relations
field to its members. It is for general information purposes
only and is not intended to provide legal advice relative to
any particular factual situation or labor dispute. Questions
or requests for advice concerning specific problems should
be directed to your legal counsel. This production is
intended for management use only and any reproduction,
distribution or circulation hereof beyond management is
strictly prohibited.
24
Connell Construction Co. supra.; Lawlor v. Loewe, 235
U.S. 522, 533 – 534 (1914); Allen Bradley, 325 U.S. at 808
– 10; FritoLay, Inc., v. Retail Clerks Local 7, 629 F2d. 653,
663 (10th Cir.1980); Larry v. Muko, Inc., v. Southwest PA
Bldg. & Constr. Trades Council, 609 F2d. 1368, 1372-73
(3rd Cir.1979).
25 Section 8(b)(4)(B) of the National Labor Relations Act
forbids picketing as a form of secondary pressure and
Section 8(e) of the Act forbids agreements not to do
business with another. The Act grants narrow exceptions
for construction unions working on a common site, and for
unions operating in the garment industry.
26 Connell Construction Co. supra, at 633 – 635.
27 See 15 U.S.C. § 17 (1982); Altemose Constr. Co. v.
Atlantic Cape May & Parts, 493 F. Supp. 1181, 1190 – 91
(D. N.J. 1980); United States v. Drivers, Chauffeurs &
Helpers Local 639, 32 F. Supp. 594, 598 – 600 (D. D.C.
1940); Dean v. International Longshoremen’s Assn., 17 F.
Supp. 748, 750 (W.D. La. 1936).
28 Eastern R. Conference v. Noerr Motor Freight Inc., 365
U.S. 127, 137 – 38 (1961).
29 See, note 26, supra.
30
See, e.g., Brown v. Pro Football, Inc., 518 U.S. 231,
250 (1996).