AAI Asks FTC and DOJ to Deliver on Promise of Tough Sanctions for Naked Wage-Fixing Agreements (In the Matter of Your Therapy Source)

On August 30, 2018, AAI filed public comments encouraging the Federal Trade Commission (FTC) to help ensure deterrence through private enforcement when naked wage-fixing agreements harming workers are not prosecuted criminally by the Department of Justice (DOJ).

In In the Matter of Your Therapy Source, the FTC brought an administrative challenge against a naked agreement among therapist staffing companies to collusively reduce the rates paid to therapists placed with patients via home health agencies. The parties settled and agreed to a consent order whereby the staffing companies would cease and desist from colluding with competitors on compensation paid to their therapist employees or independent contractors going forward.

The AAI comments applaud the FTC’s action and praise the FTC’s use of administrative cease-and-desist authority, which is a key competition policy tool. However, in light of the joint commitment by the FTC and DOJ to severely punish naked wage-fixing and no-poaching agreements in their 2016 Guidance to Human Resource Professionals, AAI raises questions as to whether the FTC, DOJ, and private enforcers will collectively provide sufficient deterrence in this matter.

The comments ask the agencies for more transparency around the decisions not to prosecute the naked agreement criminally and not to seek monetary equitable relief, such as restitution or disgorgement. They also raise questions as to whether the proposed consent order goes as far as it could in helping to promote private enforcement, which is especially important to ensure deterrence in this matter and against naked wage-fixing agreements generally.

The comments encourage the FTC to carefully consider whether private plaintiffs will have sufficient incentives to bring class claims, and to expand the notice provision of the consent order to increase the probability that injured therapist employees and independent contractors will vindicate their rights.

The comments were drafted by AAI Associate General Counsel Randy Stutz.