Can employers in the same industry collaborate on pay scales in order to control wage inflation?


You and your friend are managers at different companies in an industry where employee wage growth has gotten out of control. Over lunch, your friend suggested solving this problem by contacting other industry leaders and agreeing to a more reasonable pay scale for participating companies' employees. Is this legal?


No, an agreement among competitors to set wages or establish a pay scale is an illegal wage-fixing agreement. If you take your friend's suggestion and form such an agreement on behalf of your company with your friend or others acting on behalf of their companies, you would likely be exposing yourself and your employer to substantial criminal and civil liability. The U.S. Department of Justice could open a criminal investigation, and if it determines that your agreement is a naked wage-fixing agreement, it could bring criminal charges against you, your employer, your friend, and other individuals or companies that participate in the agreement. Participants also could be subject to substantial civil liability.

Additionally, merely inviting a competitor to enter into an illegal agreement may be an antitrust violation — even if the invitation does not result in an agreement to fix wages or otherwise limit competition. In antitrust terms, an "invitation to collude" describes an improper communication to an actual or potential competitor that you are ready and willing to coordinate on price or output or other important terms of competition. Be aware that private communications among competitors may violate the Federal Trade Commission Act if: (1) the explicit or implicit communication to a competitor (2) sets forth proposed terms of coordination (3) which, if accepted, would constitute a per se antitrust violation.

Source:Antitrust Guidance for Human Resource Professionals, released October 20, 2016;

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