The Patriots, Falcons, and . . . class actions?

Just five days before Super Bowl LI, the intersecting crosshairs of antitrust and employment law class actions zeroed in on its latest target: the National Football League. On January 31, 2017, a former cheerleader for the San Francisco 49ers filed a putative class action in the Northern District of California, alleging that the NFL and its member teams conspired to suppress cheerleader wages. Doe v. NFL Enterprises LLC, et al. (N.D. Cal. Case No. 3:17-cv-00496-MEJ).  Specifically, the NFL and its member teams allegedly conspired to:

  1. Refrain from recruiting cheerleaders from fellow teams;
  2. Pay cheerleaders a low, flat wage for each game performed;
  3. Not pay cheerleaders for time spent rehearsing;
  4. Not pay cheerleaders for time spent on various community outreach events;
  5. Prohibit cheerleaders from being employed by other professional cheerleading teams, not just within the NFL;
  6. Prohibit cheerleaders from discussing their earnings with each other in an effort to suppress earnings by ensuring that they would not become aware of the nature of their employment and compensation, thus further depressing and suppressing the market; and
  7. File with the NFL all cheerleader contracts to ensure participation with and enforcement of the conspiracy.

This, of course, falls on the heels of the now-resolved litigation that roiled Silicon Valley regarding allegations of similar anti-poaching and wage suppression conspiracies.

So what is an HR Manager to do? The competition for talented and skilled employees is fierce, and it can often feel like your competitors are constantly picking-off your best and brightest.  Is there a way to stop the bleeding, both in terms of employees and the company’s pocketbook?

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have issued some guidance to HR professionals on the issue.[1]  The bad news: naked agreements between competitors to fix employee wages or refrain from soliciting or hiring a competitor’s employees are per se illegal and may subject the company, you, or both to criminal prosecution.  The somewhat better news: there is a way for competing employers to share employee wage and recruiting information.  The DOJ and FTC have established an “antitrust safety zone,” wherein wage and recruiting information sharing is permissible if (1) a neutral third party manages the exchange; (2) the exchange involves information that is relatively old; (3) the information is aggregated to protect the identity of the underlying sources; and (4) enough sources are aggregated to prevent competitors from linking particular data to an individual source.  It’s a small island of sanctuary, and the sharing of old information may not be entirely useful, but you’ll avoid a class action or, worse, prosecution.

So, enjoy your Super Bowl Sunday, no matter who you’re rooting for. And remember, sometimes the safety zone is a good thing.