Geisinger and Evangelical Community Hospital, two health systems in central Pennsylvania, have agreed to pay a total of $28.5 million dollars to settle a federal class action containing allegations that they maintained an unlawful "no-poach" agreement that restricted the hiring and recruitment of each other's healthcare workers between January 01, 2014, and August 05, 2020.
Under the settlement, Geisinger will contribute $19 million and Evangelical will contribute $9.5 million, with payments to be distributed among an estimated class that includes nurses and other healthcare employees who worked at facilities in Union, Snyder, Northumberland, Montour, Lycoming, and Columbia counties during the covered period. The agreement is subject to approval by the U.S. District Court for the Middle District of Pennsylvania.
The lawsuit was initiated in February 2021 by three registered nurses who alleged that the two organizations secretly agreed not to recruit or hire one another's staff, a practice the plaintiffs claimed reduced competition for labor, limited job mobility, and suppressed wages for thousands of workers. The complaint referenced a prior investigation by the U.S. Department of Justice into Geisinger's proposed partial acquisition of Evangelical, which had raised antitrust concerns about reduced competition between the two systems.
Public statements from Geisinger in connection with the agreement deny any wrongdoing. Geisinger describes the decision to settle as a way to avoid the ongoing costs and distractions of litigation.
Source: https://www.yahoo.com/news/articles/geisinger-evangelical-agree-28-5m-035900351.html
Commentary
Federal antitrust law treats agreements between employers not to solicit or hire one another's employees as unlawful restraints of trade, enforced primarily under Section 1 of the Sherman Act by the Department of Justice and Federal Trade Commission.
Since 2016, federal enforcement agencies have warned that they may prosecute stand-alone no poach and wage-fixing agreements criminally, placing them in the same category as price-fixing and customer-allocation conspiracies.
These enforcement efforts have focused heavily on healthcare labor markets, where competing hospitals, physician groups, and staffing entities vie for nurses, physicians, and allied health professionals, and when even informal understandings, emails, or conversations among competitors can be characterized as market allocation for employees.
Liability risk is not limited to written contracts because agencies have explained that antitrust violations can arise from informal, unwritten understandings that restrict recruiting or impose agreed limits on wages or benefits.
Healthcare employers seeking to reduce this exposure can emphasize independent decision-making on hiring and compensation and prohibit any agreement with competitors that limits employee mobility.
Human resources and leadership teams should receive antitrust training that covers prohibited conduct such as agreeing not to recruit from specific facilities or exchanging competitively sensitive wage data outside of structured, lawful surveys. Requiring mutual approval before hiring a competitor's staff.
Organizations should maintain clear policies barring discussions of specific pay rates, benefits, hiring freezes, or recruiting "truce" arrangements with competing employers. Channel necessary labor market discussions, such as those in joint ventures or clinically integrated networks, through counsel to ensure they are ancillary to legitimate collaboration and no broader than necessary.
Regular compliance audits, documentation of independent salary-setting processes, and prompt investigation of complaints about "gentlemen's agreements" or informal practices can help demonstrate a culture of compliance. These practices can also reduce the likelihood that normal recruiting challenges will be misconstrued as unlawful no poach schemes.
