DOJ Brings First Criminal Charges for Wage Fixing
This long-anticipated criminal wage-fixing case reinforces DOJ's continued focus on labor markets.
The Department of Justice Antitrust Division ("DOJ") has indicted a Texas businessman for conspiring with competitors to fix employee wages in violation of the Sherman Act. This action challenges particularly blatant conduct, but is consistent with recent attention to antitrust in employment contexts.
Defendant Neeraj Jindal is the former owner of a Texas-based therapist staffing company. The indictment charges that Jindal conspired with competitors to fix prices by decreasing "pay rates" to their physical therapists. According to the indictment, between March and August 2017, Jindal and owners of competing therapist staffing companies agreed to lower these employees' pay rates. The conspirators communicated through text messages, and the indictment quotes statements by Jindal to owners of four competitors urging them to "collectively … move together" to lower pay rates for their employees.
Under the Sherman Act, individuals convicted of price-fixing agreements face up to 10 years' imprisonment and a fine of $1 million. Both DOJ and the Federal Trade Commission ("FTC") have analogized wages to the "price" of labor, as outlined in their 2016 "Antitrust Guidance for Human Resources Professionals."
The second count charges Jindal with obstructing a parallel FTC and Texas Attorney General civil investigation, settled in 2018, when he made false statements and concealed information from FTC investigators. Obstructing FTC proceedings is punishable by five years' imprisonment and a $250,000 fine.
Criminal antitrust prosecution often leads to private plaintiffs challenging the same conduct in civil litigation seeking damages; even companies or executives that cooperate with DOJ and obtain "leniency" from criminal prosecution face this civil risk. And even if the government does not criminally enforce wage fixing or other employment-related collusion, such conduct remains subject to civil challenge by the antitrust agencies or private plaintiffs.
This is DOJ's first criminal wage-fixing prosecution, highlighting several points:
- Criminal charges require strong evidence. DOJ brought this indictment with particularly strong evidence. The defendant's text messages reflect an undisguised attempt to fix wages. A careless approach to communications always creates risk.
- Continued interest in employment issues. DOJ has announced an "ongoing commitment to prosecute anticompetitive conduct affecting American labor markets." Antitrust activity in employment contexts has received increasing attention since the "no poaching" enforcement actions against technology companies a decade ago. The next administration is unlikely to change this, though there may be more civil enforcement first, given DOJ's high standard for criminal charges and civil actions' lower burdens of proof.
- Obstruction charges can be worse than the investigation. Obstruction can be worse than the crime. DOJ and FTC take their investigations seriously, and this defendant's obstruction helps explain DOJ pursuing him criminally.
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