- Keep antitrust legislation in mind. The Sherman Antitrust Act clearly spells out what compensation professionals and/or employers are allowed to do when it comes to sharing data involved in salary and budget planning.
- Stick to third-party resources. The Department of Justice and the Federal Trade Commission’s antitrust guidance provides a potential safe harbor provision that says “an exchange of compensation data may be lawful if an independent third party manages the exchange, and the data is historical, aggregated and anonymized.”
- Avoid risk. The simplest way to eschew running afoul of antitrust legislation is by not sharing compensation or benefits data directly with competitors, as antitrust enforcers are increasingly focused on labor markets, and HR departments are the buyers in that market.
As organizations continue to finalize their 2023 salary budgets, mum’s the word regarding sensitive employee data, or serious economic consequences could await.
According to Lee Berger, a partner in Steptoe & Johnson LLP’s Antitrust practice, the Sherman Antitrust Act clearly spells out what compensation professionals and/or employers are allowed to do when it comes to sharing the data involved in salary and budget planning.
Berger explains that data- or information-sharing agreements among competitors regarding wages and benefits can violate the antitrust law — that is, if they have an anticompetitive effect. For instance, such “sharing agreements” could depress wages or benefits, or reduce the number of positions opened.
Berger is keenly tuned into this area of employment law, as he formerly served as the Chief of the Civil Conduct Task Force, Antitrust Division of the U.S. Department of Justice. In that role, he managed a major case, U.S. v. Cargill Meat Solutions filed by DOJ, which deals directly with the anti-competitive issue.
“This situation includes both direct exchanges between companies and exchanges through third-party aggregation services, such as benchmarking groups,” Berger said.
An HR leader looking for help in this area can access the DOJ and the Federal Trade Commission’s Antitrust Guidance document, as it contains a potential safe harbor provision that says “an exchange of compensation data may be lawful if an independent third party manages the exchange, and the data is historical, aggregated and anonymized.”
Berger further explains that while it is unclear if there are more agreements regarding compensation data exchanges, the DOJ and FTC have sharply increased their focus on exchanges of compensation data.
Also, in July 2021 President Biden issued an Executive Order on Promoting Competition in the American Economy, which highlighted as an enforcement priority antitrust issues in labor markets, including the aggregation of data.
Then this past summer the DOJ filed the aforementioned complaint in U.S. v. Cargill Meat Solutions, securing an onerous consent decree to address agreements among HR staff at poultry processors to share plant worker wage, benefits and budgeting information — including information shared through a data aggregation service that did not meet the safe harbor provision of the DOJ/FTC guidelines.
“The consent decree required the poultry processors to pay tens of millions of dollars in restitution, appoint an outside monitor to look for any antitrust violations, and put in place an antitrust compliance program,” Berger said. “It also essentially barred a third-party data aggregator and its owner from future business aggregating compensation data.”
Avoiding Risk as an Employer
Berger offers a couple of key suggestions to employers on how to potentially avoid risk when it comes to the Sherman Act anti-competition issue. For one thing, simply do not share compensation or benefits data directly with competitors.
“And, if you do use a data aggregator to share data, ensure that the data aggregator meets the requirements of the safe harbor provision in the guidelines, including that you cannot de-anonymize the data you get back,” Berger said.
Finally, he notes, antitrust enforcers are increasingly focused on labor markets, and HR departments are the buyers in that market.
“HR should be treated the same under the company’s antitrust compliance policy as the sales and marketing staff,” Berger said.
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