Dive Brief:
- Two recent matters -- separate cases involving Detroit Medical Center Duke University's medical system -- highlight that agreements among competitors which serve to stifle competition for employees may be on the rise in the healthcare industry.
- "No-poach" agreements, under which employers agree not to steal each other's employees, have long been a feature of industries in which key talent is in short supply. But such agreements can restrict competition in employment markets by restricting employee movement and limiting the compensation of employees who might otherwise be attracted to work for a competitor, according to an article at JDSupra.com.
- As a result, "no-poach" agreements can violate antitrust prohibitions against agreements that restrict competition, and result in high penalties, reports Manatt, Phelps & Phillips, the large law firm based in New York City.
Dive Insight:
Historically, the healthcare industry has not been the focus of litigation concerning agreements not to solicit or recruit employees. However, as healthcare and hospital mergers continue, and the number of employers in a geographic market decreases, competition for highly trained employees may intensify, driving up salaries and costs, according to Manatt.
The two recent cases serve as a strong reminder that healthcare employers should avoid discussions about employees with other providers in a region that may have the effect of limiting competition for employees. The recent cases also raises the possibility that the use of "no-poach" agreements in healthcare contexts may carry new litigation-related risks.
