DOJ, FTC, DOL, NLRB Agreement Continues to Focus on Employee Consequences of M&A | Jackson Lewis PC

On August 28, 2024, the Department of Justice, Antitrust Division (DOJ), Federal Trade Commission (FTC), Department of Labor (DOL), and National Labor Relations Board (NLRB) signed a Memorandum of Understanding on Labor Considerations in Merger Investigations that will enhance the ability of the antitrust agencies to investigate the possible labor effects of mergers and acquisitions on the labor markets. This is the fifth memorandum of understanding (MOU) on this matter since March 2022. Companies undergoing or considering mergers or acquisitions should be aware that the agencies continue to signal a focus on labor market impacts.

The DOJ and FTC jointly enforce the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR). The HSR authorizes them to investigate the effects of a merger or acquisition on competition.

According to the latest MOU, the DOL and NLRB “agree to meet promptly with (DOJ or FTC) upon request and provide technical assistance, as well as additional information and data, as appropriate.” Annex A of the MOU identifies the specific reports and data sets that the antitrust agencies are interested in from the employment agencies. From the DOL’s Bureau of Labor Statistics and the Employment and Training Administration, the antitrust agencies are interested in:

1. Employment and Wage Statistics by Occupation (Wage data by geographic region, occupation, and industry)
2. Quarterly Employment and Wage Census (employment and wage data by geographic region and industry)
3. O*NET (data on skills, knowledge, tasks and professional activity by profession)
4. Employment, Hours, and Earnings by State and Metropolitan Area (Number of Employees, Average Weekly Hours, Average Hourly Earnings, and Average Weekly Earnings by Region and Industry)
5. Job Offers and Employee Turnover Survey (Job Offers, Hiring and Layoffs by Industry)
6. Business Employment Dynamics (Employment Growth and Decline by Geographic Region and Industry)

From the NLRB’s perspective, antitrust agencies are interested in:

1. Representation activities
2. Allegations of unfair labor practices and related decisions

Previous agreements, proposals and work guidelines

The four previous agreements between antitrust agencies and employment agencies are:

These MOUs are designed to promote information exchange, consultation, coordination, training, education, and research. The MOUs between the FTC and labor agencies have identified areas of “mutual regulatory interest,” which include:

1. Independent contractor misclassification;
2. Use of restrictive clauses;
3. The ability of employees to take coordinated actions;
4. Focus on the labor market;
5. Use of algorithmic decision-making in employment;
6. “Development of the labor market” in the context of the “gig economy” and other alternative forms of employment.

The DOJ-NLRB agreement stated that the focus was on anticompetitive conduct through “collusion and business models designed to avoid legal liability, such as misclassifying workers (as independent contractors).” The DOJ-NLRB agreement stated that the agencies shared an interest in protecting workers from interference with their rights “to earn fair market wages and to freely exercise their rights under employment law.”

In addition, in its June 2023 Notice of Proposed Rulemaking (NPRM), the FTC proposed adding material workforce disclosures to the Form of Notification and Pre-Merger Report submitted by parties in connection with the antitrust review of mergers and acquisitions. The NPRM comment period closed in September 2023 with 752 comments. (Of course, that pales in comparison to the 26,813 comments the FTC received on the NPRM on the Proposed Rule of Non-Competition.) As of this writing, there was no material news on the status of the merger notification NPRM.

In addition, the FTC devoted Guideline 10 of its final merger guidance, published on December 18, 2023, to employee monopsony and its impact on wages and working conditions.

Consequences

Companies undergoing or considering mergers or acquisitions that are subject to HSR review should be aware that the antitrust authorities conducting these reviews have clearly expressed their interest in the impact of such transactions on the workforce.