Published on Jan 09, 2025
FTC finds building services contractors’ no-hire agreement unlawful. The commissioners voted unanimously on Monday to order Planned Companies to cease its policies prohibiting building owners from hiring workers employed by Planned.
The contractor’s no-hire rules are a violation of Section 5 of the FTC Act, the Commission said, because they restrict worker mobility, reduce compensation and benefits, and can impede rivals’ entry to the market.
Planned Companies—which operates as a trio of real estate service divisions—work as middlemen, helping office and apartment buildings staff janitors, security guards, and other workers in nearly a dozen states. Planned employs over 3,400 workers, according to its website.
The order comes on the heels of the agency’s order barring the no-hire agreements enforced by Guardian Services, another building services contractor. This order is the first no-hire enforcement to receive unanimous support from the commission, which employment experts say presents a clear line in the sand for the illegality of no-hire policies similar to Planned’s.
Also known as no-poach agreements, no-hire provisions began receiving significant antitrust scrutiny over a decade ago. Federal enforcers say that companies which agree not to hire rivals’ employees drive down their wages and other benefits by depriving them of the ability to force employers to compete for their labor.
The Department of Justice has taken the lead on such agreements until recently, pursuing them as criminal violations of Section 1 of the Sherman Act. The half-dozen cases that made it to trial mostly ended in defeat for the government, although several private plaintiffs have either won in court or received significant settlements.
Ioana Marinescu, a University of Pennsylvania economics professor and the principal economist at the DOJ Antitrust Division until June, noted the dearth of clear-cut cases deeming no-hire agreements illegal: the Justice Department’s 2014 lawsuit against eBay and Intuit ended in a settlement, and the Guardian order last month lacked support of the Republican commissioners.
A harder line on no-hire agreements could reshape employment practices across industries that rely on subcontracting, said Laura Padin, the Director of Work Structures at the National Employment Law Project. Staffing companies and temp worker agencies, which often restrict workers from taking full-time offers at their host companies, as well as high-paying consultancy firms, may be pushed to cede exclusive claims to their employees.
The restrictions that Planned Companies impose on its clients and workers are particularly severe, Marinescu said. Their contracts not only prevent building owners from hiring Planned’s employees, but also workers from other property management companies: if a building replaced Planned with another service provider, that company would be unable to retain any of the Planned employees at the site.
In her statement on the order, FTC Chair Lina Khan asserted that the arrangement is therefore an unlawful horizontal agreement among competitors.
“That’s what makes this one particularly nefarious for competition,” Marinescu said. “It not only affects the building owners’ opportunity to hire and therefore for the workers it forecloses this opportunity. But it also affects the product market competition.”
While they voted with their Democratic colleagues, Republican commissioner Andrew Ferguson, joined by Melissa Holyoak, offered a concurring statement laying out his divergence in rationale. Khan’s statement, co-signed by Commissioners Slaughter and Alvaro Bedoya, determined that Planned’s no-hire clauses were inherently anticompetitive “nature and character,” and therefore per se unlawful under Section 1 of the Sherman Act.
Ferguson and Holyoak didn’t go that far—they didn’t see the provisions as constituting a clear horizontal restraint, and measured the effect of the policy on a rule of reason standard, weighing the provision’s potentially procompetitive purpose against its anticompetitive harms. On that basis, Ferguson and Holyoak determined that the no-hire rule had an unreasonable anticompetitive impact.
While the circumstances in last month’s no-hire order against Guardian did not reach the Republican commissioners’ bar for unlawful conduct, Planned Companies’ actions crossed the line. The determining factors of that difference remain unclear: in his statement, Ferguson wrote that while the facts of the complaint itself did not give him “reason to believe” it violated Section 1 of the Sherman Act and therefore Section 5 of the FTC Act, the commission compiled evidence that swayed him. However, that evidence is redacted from his statement.
With the Republicans set to take control of the FTC in the coming weeks, the enforcement action offers a window into the type of labor-related antitrust issues that could gain the support of a commission with a Trump-appointed majority.
“It certainly shows that [Republican commissioners] are open to taking on this issue—with the right fact pattern,” Marinescu said.
Planned didn’t respond to a request for comment.
The settlement undermines arguments Planned has used in the past to oppose unionization, said Brent Garren, the deputy general counsel of 32BJ, the Service Employees International Union local which represents workers at more than a half-dozen Planned buildings.
“Planned has said to the workers, ‘If you vote for 32BJ or support 32BJ, you’re going to lose your jobs,’” Garren said. “And I think that this decision undercuts their ability to convince workers of that. The restrictive covenant was one mechanism through which they could try to make good on this claim that organizing with the union would lead them to lose jobs.”
He pointed out that restricting workers’ mobility doesn’t just harm the worker. No-hire provisions also tip the playing field, blocking Planned’s competitors from hiring experienced personnel. Building managers also suffer, he said, because they’re prohibited from choosing the best contract and value if they want to stick with workers who know the area and the ins and outs of the job.
The National Labor Relations Board, which issued a complaint in September over charges 32BJ brought against Planned targeting the no-hire provisions, announced Monday it reached a settlement with the company at the end of December. Under the terms of the settlement, Planned will notify employees of their rights and tell client buildings that they have rescinded the restrictive covenants and will not enforce them.
FTC to consider policy statement on Clayton Act’s labor exemption in Jan. 14 meeting. The five members of the FTC will debate issuing a statement that clarifies that the Clayton Act’s labor exemption—meant to protect organizing workers and unions from antitrust scrutiny—does not depend on a worker’s classification as an employee or independent contractor.
“The proposed policy statement will make clear that workers’ organizing and collective bargaining activity may be protected from antitrust liability when what is at issue is the compensation for their labor or their working conditions,” the FTC said.
The move to consider the statement is a marked change from the FTC of just a few years ago. In 2017, a two-member FTC voted in support of filing an amicus brief alongside the DOJ in Chamber of Commerce v. City of Seattle, a lawsuit seeking to block the Washington city from enforcing an ordinance that would regulate pay, licensing, and other aspects of delivery and rideshare work.
Although such an ordinance would enable independent contractors for companies like Uber (UBER) and Lyft (LYFT) to bargain collectively—technically a violation of the Sherman Act—Seattle claimed an exemption from antitrust law under the state action doctrine. It lacked the legal authority to do so, the FTC and DOJ argued.
Seattle later dropped the portion of the ordinance allowing collective bargaining over pay.
Under the Biden administration, the FTC’s Democrats have pushed to protect gig worker organizing from antitrust lawsuits. Bedoya has given several speeches which touch on the topic, and Slaughter and Khan have expressed support for the effort.
There’s been at least one major appellate decision in support of their argument. The First Circuit heard arguments in 2022 in Confederacion Hipica de Puerto Rico, Inc. v. Confederacion de Jinetes Puertorriquenos, Inc., which involved Puerto Rican horse jockeys, classified as independent contractors, who went on strike seeking higher pay after decades of stagnant wages. Horse owners and racetrack operators argued the jockeys were unable to strike collectively due to their status as independent contractors.
But the appellate court found that the key question at stake was not their employment status, but whether they were seeking “compensation for their labor.” Because the work stoppage centered on wages, the strike fell within the labor exemption, the court ruled.
Labor-Antitrust Litigation Tracker
| Plaintiff | Defendant | Summary/Key Arguments | Recent Developments | |||
| Victoria Ross | University of Pittsburgh Medical Center | One of the first cases to allege that an illegal monopsony over labor markets violates Section 2 of the Sherman Act, Ross v. UPMC is closely modeled on a complaint submitted to the DOJ by a coalition of unions in 2023. The plaintiffs, a putative class of nurses and other hospital workers, allege that the hospital network has gained dominance over regional labor markets through a series of roll-up acquisitions. UPMC allegedly deploys its labor market power by blacklisting former personnel, using noncompetes, unionbusting, and driving down wages and working conditions while understaffing its locations. | · The Justice Department in September filed a statement of interest in the lawsuit, which is located in U.S. federal court in the Western District of Pennsylvania. DOJ pushed back on arguments UPMC made in its motion to dismiss, saying the hospital network seeks to raise the bar for plaintiffs alleging exclusionary conduict that harms workers “to nearly insurmountable heights.” | |||
| The DOJ has also opened an investigation into the network. | · Judge Susan Paradise Baxter ordered oral arguments over UPMC’s motion to dismiss. Those are set to take place Jan. 28 at 11am in Erie, PA. | |||||
| Leinani Deslandes, Stephanie Turner, et al | McDonald’s USA | Deslandes v. McDonald’s in the federal court in the Northern District of Illinois has become a leading no-poach case since it was originally filed in 2017. The plaintiffs, a pair of McDonald’s workers, accused the fast food chain in a now-combined class action of violating Sherman Act Section 1 by including a no-hire provision in its franchise agreements. That restriction prevented employees from switching jobs to other McDonald’s franchises, which often came with pay rises or other benefits, they argued. | · The parties have been proceeding through discovery since the case was remanded in September 2023. | |||
| McDonald’s won a motion for judgment on the pleadings in 2022, but the 7th Circuit reversed the lower court. Judge Frank Easterbrook, a respected antitrust jurist, wrote that the lower court erred in quickly deciding that the case necessitated the rule of reason, rather than the more plaintiff-friendly per se standard. Benefits to customers can’t justify harms to workers, Easterbook said in remanding the case. | · Judge David Weissman ordered a joint status hearing on discovery for Feb. 26. The deadline to complete fact discovery is Feb. 21. | |||||
| Tymir Oliver, et al | National Collegiate Athletic Association, Atlantic Coast Conference, Pac-12 Conference, Southeastern Conference, The Big Ten Conference, The Big Twelve Conference | Known by its abbreviation as In Re College Athlete NIL Litigation, this combination of antitrust class actions accuses the NCAA and the Power Five conferences of restricting name, image, and likeness, telecast revenue, and pay-for-play compensation from student athletes. It’s by far the largest of the cases targeting student athlete pay after the Supreme Court opened the door wider for such lawsuits in its landmark 2021 decision in NCAA v. Alston. | · The final approval hearing for the settlement is April 7. | |||
| Although Judge Claudia Wilken of the U.S. federal court in the Northern District of California initally denied a settlement motion, she preliminarily approved a second offer of approximately $2.78 billion in October. The terms of the settlement have faced multiple challenges from different coalitions of players, including a group of female athletes who voiced concerns that the majority of the money will go to male football and basketball players. | · Athletes have until Jan. 31 to submit a settlement claim. | |||||
| Ryan, LLC, The U.S. Chamber of Commerce, Business Roundtable, Texas Association of Business | Federal Trade Commission | The first of two ongoing challenges to the FTC’s rule banning noncompete agreements, Ryan v. FTC pits the tax services and software provider and several business groups against the agency in the Northern District of Texas and the 5th Circuit Court of Appeals. | · District Court Judge Ada Brown sided with Ryan in August, issuing a nationwide injunction that blocked enforcement of the noncompete ban. | |||
| Ryan argues that the FTC lacks the statutory authority to issue rules over unfair methods of competition, and that its rulemaking efforts violate the major questions and nondelegation doctrines. The rule is arbitrary and capricious due to a lack of reserach supporting its near-total ban on noncompetes, Ryan said. | · The FTC appealed the order to the 5th Circuit in October. It filed its appellant brief Jan. 2. | |||||
| The FTC argues that its valid statutory auithority stems from the FTC Act, that it conducted the required research and deliberation before issuing the rule, and that in vacating the rule nationwide, the district court overstepped its bounds. | · Ryan and the other appellees’ reply brief is due Feb. 3. | |||||
| The Justice Department is representing the FTC in its appeals. | · In a Jan. 7 amicus brief, Public Citizen and the National Employment Law Project backed the FTC, arguing that the rule would benefit workers, especially those at the bottom of the wage ladder. The advocacy groups said the agency has the statutory authority to issue the rule because it clearly defined noncompetes as unfair methods of competition. | |||||
| Properties of the Villages | Federal Trade Commission | The second of the two ongoing noncompete rule challenges began in Florida’s middle district, and relies on similar arguments as Ryan’s case. The FTC appealed a district court loss in September to the 11th Circuit. | · District Court Judge Timothy J. Corrigan granted POV’s preliminary injunction motion in August, but only for the corporation itself. | |||
| The case was filed by Poperties of the Villages (POV), the corporate real estate company located in The Villages, a large Florida residential community. The company argued that the noncompete ban would overrule an earlier district court decision that allowed POV to continue enforcing noncompete agreements against former employees. It raised similar yet distinct challenges to Ryans’: the FTC lacks substantive unfair methods of competition rulemaking authority, not all noncompete agreements are per se illegal, the ban cannot retroactively apply, it violates the non-delegation doctrine, and POV’s business does not involve interestate commerce, and therefore is outside the scope of the rule. | · The FTC appealed to the 11th Circuit in September. It filed its brief Nov. 4. | |||||
| · In a ruling Nov. 15, the court denied a POV motion to pause the proceedings until the 5th Circuit had ruled on the noncompete ban. | ||||||
| Department of Justice, Illinois, Maryland, New Jersey, New York | Unitedhealth Group, Amedisys | The Justice Department and state attorneys general sued to block UnitedHealth Group’s $3.3 billion acquisition of competitor Amedisys in November, in part due to the likelihood the deal would harm competition for home health care nurses. | · UHG and Amedisys filed a motion to dismiss Jan. 8, arguing DOJ and the state attorneys general failed to define the “hundreds of local home health markets” where the merger would harm competition. | |||
| The lawsuit, filed in Maryland district court, alleges that UnitedHealth sees Amedisys as one of its “Main 3” competitors for nurses, targets it in recruiting campaigns, and once celebrated “kicking [Amedisys’s] [*]ss in hiring,” according to the complaint. Competition has been a boon for nurse wages and benefits—a boon that would disappear if the merger is completed, DOJ said. | DOJ and a coalition of states on Jan. 3 proposed what they called an “aggressive” ten month discovery schedule that would tee up the case for trial in October. | |||||
| An Amedysis spokesperson in November said the company remains committed to the deal. | · In the filing, DOJ said UnitedHealth has abandoned its original proposal of the home health care company VitalCaring as a divestiture buyer. It has not proposed a new candidate. | |||||
| · UnitedHealth and Amedisys proposed a shorter schedule, with a trial held in August rather than October. |
