A group of engineering companies will pay $7.4 million to settle a class-action lawsuit over their no-poach agreements.
Cyient, QuEST Global Services-North America, Parametric Solutions and Agilis Engineering reached settlement agreements with employees who claimed the companies formed illegal no-poach agreements. The plaintiffs intend to file a motion for preliminary approval of the settlements, reached on Jan. 24, according to court documents.
The four companies, based in Connecticut and Florida, did not respond to requests for comment. We’ve gathered a group of articles on the news from SHRM Online and other media outlets.
Other Lawsuits Pending
The plaintiffs’ claims are still pending against Pratt & Whitney (a subsidiary of jet-engine maker RTX) and Belcan Engineering. The settling companies are outsourcing firms that work with Pratt & Whitney on engineering projects. The companies have denied any wrongdoing.
(Reuters)
Antitrust Law
With written or oral no-poach agreements, companies agree to not hire each other’s workers. In general, it’s illegal for a group of businesses to agree to suppress wages or not compete for certain employees, even if their motivation is to reduce labor costs, according to federal guidance on the topic. The Sherman Act, a federal antitrust statute, prohibits agreements that unduly constrain trade or commerce.
In April 2023, the U.S. District Court for the District of Connecticut dismissed an antitrust case, U.S. v. Patel, which involved a jet-engine manufacturer that had a no-poach agreement with several outsourcing firms that competed for the manufacturer’s projects. The DOJ had leveled criminal charges against a group of Connecticut HR executives for restricting the hiring and recruiting of aerospace engineers.
(SHRM Online and SHRM Online)
SHRM’s Position
SHRM has argued that completely banning all no-poach agreements would be detrimental to companies and HR professionals. SHRM believes no-poach agreements are sometimes lawful when attempting to partner with multiple staffing firms for the same project.
DOJ Lost Several Cases
Since the Department of Justice (DOJ) began prosecuting no-poach agreements as illegal market allocation arrangements, the department has secured no convictions in contested cases. Instead, 13 defendants have been acquitted in four jury trials.
In December 2023, the DOL requested its sole remaining criminal no-poach antitrust case be dismissed, signifying that the department could be shifting away from its promised heavy enforcement of all no-poaching arrangements.
(Forbes and SHRM Online)
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