FTC Labor Task Force Reinforces Importance of Avoiding Anticompetitive Labor Practices

March 7, 2025 – The Federal Trade Commission has announced a task force that will focus on unfair practices that impact labor markets, indicating that the new administration’s approach to antitrust enforcement will focus in part on anticompetitive conduct that adversely affects American workers. The new Joint Labor Task Force will target measures that restrict workers’ mobility, such as no-poach agreements, non-solicitation agreements and noncompete agreements. It will also focus on employers that agree with competing employers to fix employees’ wages or otherwise use anticompetitive methods to entrench market power in a given labor market. Finally, the task force plans to investigate collusion or unlawful coordination among employers regarding diversity, equity and inclusion metrics, asserting that such coordination has the potential to diminish labor competition by excluding certain workers from employment based on their race, sex or sexual orientation.

This announcement, made on Feb. 26, may come as a surprise to some who expected the Trump administration to take a less aggressive approach to antitrust enforcement and to walk back the Biden administration’s focus on labor markets. It is a timely reminder that companies will need to remain vigilant about antitrust compliance for the foreseeable future. In particular, companies should be cognizant of potential antitrust risks arising from certain types of agreements with their employees or with competing employers.

The specifics of the new administration’s approach to antitrust enforcement are expected to become clearer in the coming months. In the meantime, employers should keep the following considerations in mind:

1. Approach no-poach agreements with caution and tailor them to procompetitive goals: Agreements between employers not to poach, hire and/or solicit one another’s employees may violate the antitrust laws unless the agreement is both (1) ancillary to a separate transaction or collaboration and (2) reasonably necessary to achieve a legitimate procompetitive objective of that transaction or collaboration. When companies wish to include an ancillary no-poach provision in a broader agreement — such as a nondisclosure agreement in a potential transaction or as part of a collaboration that gives one party access to the other’s employees — they should consult antitrust counsel and narrowly tailor the provision to ensure it is not anticompetitive. The provision should be no broader than needed to protect a legitimate interest, such as facilitating the sharing of employee information necessary to conduct transaction due diligence by reassuring a potential seller that the buyer will not use information to help the buyer poach the seller’s employees if the transaction does not proceed. Placing limits on the duration of the provision and the number of affected employees can help to reduce the potential antitrust risk, as can carving out an exception to allow for the hiring of employees who respond to an ordinary-course general solicitation rather than targeted outreach.

2. Noncompete agreements should avoid unreasonable restrictions on worker mobility: Noncompete agreements, which restrict an employee’s ability to take on a new position in the same industry after leaving their current job, can constitute an antitrust violation if they are unduly onerous and impose excessive restrictions with respect to duration or geographic scope. The agreement should be no broader than reasonably necessary to protect against the disclosure of the former employer’s confidential and competitively sensitive information. What constitutes a reasonable duration generally depends on how quickly the proprietary information held by a given former employee becomes stale and loses its competitive value. The reasonableness of a geographic restriction can depend on factors such as the scale of the former employer’s business operations and whether the information that the former employee had access to was limited to a particular geographic market.

3. Exercise heightened caution when parties have market power: No-poach provisions and noncompete agreements are more likely to run afoul of the antitrust laws when they significantly restrain employee mobility. If a no-poach or noncompete agreement impairs employees’ ability to change jobs because few other alternative employers are available, the agreement will be more closely scrutinized and the parties should take additional care to limit the agreement’s scope. Given the fact-specific nature of these issues, consulting antitrust counsel to draft an appropriately tailored agreement is advisable. Counsel should also be aware of state law considerations, which vary considerably by jurisdiction. Additionally, employers that have significant power in a given labor market should be particularly careful not to abuse that power by engaging in anticompetitive conduct, such as coordinating with competing employers to depress wages or impose unfavorable conditions on workers.