The NLRB’s Busy July – A Harbinger of Future Coordinated Federal Action Between the NLRB, FTC, and DOJ
July was a busy month for the National Labor Relations Board (“NLRB”). In the span of a week, the NLRB signed Memoranda of Understanding (“MOU”) with both the Federal Trade Commission and the U.S. Department of Justice’s Antitrust Division. Signaling a desire to work collaboratively across federal agencies, both MOUs highlight the shared interests between the NLRB, FTC, and DOJ in promoting free, open, and competitive labor markets through increased information sharing, training, and enforcement actions.
These agreements come just over a year after President Biden issued an “Executive Order on Promoting Competition in the American Economy,” which called on several federal agencies to address competition issues, and included a mandate for agencies to “coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy.” While the NLRB was not explicitly identified in the Executive Order (and the DOJ and FTC were), these recent partnerships unmistakably indicate that labor issues and anti-competition issues are inextricably linked, and the NLRB’s willingness to collaborate with other federal agencies to carry out its mandate under the National Labor Relations Act. Moreover, these recent efforts also represent a clear step by President Biden to follow through on his campaign promise to strengthen unions, worker organizing efforts, and collective bargaining. We discuss these MOUs in greater detail below and provide some takeaways for employers and business leaders.
The Federal Trade Commission MOU
Signed on July 19, 2022, the NLRB’s Press Release describes the MOU with the FTC as establishing a “partnership between the agencies that will promote fair competition and advance workers’ rights” through information sharing, cross-training for staff at each respective agency, and partnering on investigative efforts. The MOU identifies several “issues of common regulatory interest,” including: (1) labor market developments relating to the “gig economy” and other “alternative work arrangements;” (2) claims and disclosures about earnings and costs related to the gig economy and other work arrangements; (3) the implementation and/or imposition of “one-sided and restrictive contract provisions” (i.e., non-competition and non-disclosure provisions); (4) labor market concentration; (5) the impact of algorithmic decision-making on workers; and (6) the ability of workers to act collectively, as well as the classification and treatment of workers.
While this MOU does identify training and outreach as focal points, information sharing—particularly what it describes as “Nonpublic Information”—is at the heart of the MOU’s overarching goal of facilitating inter-agency cooperation. The MOU defines “Nonpublic Information” broadly as “all information in any format (including written, oral, or electronic) shared pursuant to th[e] MOU,” and specifically provides that the agencies may provide each other with such Nonpublic Information “concerning issues of common regulatory interest on an ad hoc basis, where this is consistent with applicable authorities, complies with statutory and regulatory requirements, and as otherwise appropriate.” This framework is broad, and appears to streamline the information-sharing processes between the FTC and NLRB on the wide array of “areas of common regulatory interest” enumerated in the MOU.
FTC Chair Lina Khan lauded the partnership in the NLRB’s press release, providing that she is “committed to using all the tools at our disposal to ensure that workers are protected from unfair methods of competition and unfair or deceptive practices” and that “[t] agreement will help deepen our partnership with NLRB and advance our shared mission to ensure that unlawful business practices aren’t depriving workers of the pay, benefits, conditions, and dignity that they deserve.” As we discuss below, even prior to signing the MOU, the FTC already began ramping up enforcement efforts against what it perceived to be anticompetitive restrictive covenants that inhibited employee mobility. This partnership could both increase the frequency of these efforts, and expand them into new territories.
The Department of Justice MOU
Exactly one week following the signing of the MOU between the NLRB and FTC, the NLRB entered into a similar—yet slightly more detailed—MOU with the Antitrust Division of the DOJ. In a press release announcing the MOU, the DOJ and NLRB identified a common interest in “promoting open and competitive labor markets, including through protecting American workers from collusive or anticompetitive employer practices and unlawful interference with employees’ right to organize.” To achieve these goals, the MOU identifies the following “coordination activities:”
Designating Agency Liaisons – each agency will designate an “Agency Liaison” to serve as the point person to carry out the purposes and goals of the MOU.
Information Sharing – the agencies may share information, including complaints, investigative files, reports or analyses, data, and provide technical assistance, including guidance on policy and enforcement matters.
Training, Education and Outreach – where deemed appropriate, the agencies “shall provide training” to each other’s staff in identifying issues and cases that may arise, share or co-develop training materials and programs, and develop joint policy statements and technical assistance documents.
Consultation and Coordinated Enforcement – the agencies shall develop procedures to facilitate consultation and coordination of their investigative and enforcement activities with respect to “potential violations of the antitrust or labor laws”, including consulting each other on specific complaints or charges, reviewing information obtained during investigations, or coordinating requests for information.
Referrals – if the NLRB detects a potential antitrust violation, it will refer the matter to the DOJ; conversely, if the DOJ detects a potential violation of the laws enforced by the NLRB, it will provide the affected employees with “informational materials prepared by the NLRB.”
Similar to the MOU with the FTC, this also contains a provision addressing the sharing of “Non-Public Information,” which may occur with frequency given the prominent position information sharing holds in the joint-agreement. According to Assistant Attorney General Jonathan Kanter, this MOU will allow the two agencies to “cooperat[e] more closely” and “share information on potential violations of the antitrust and labor laws, collaborate on new policies, and ensure that workers are protected from collusion and unlawful employer behavior.”
Takeaways for Employers
These joint agreements mark a significant step toward further collaboration between the NLRB and other federal agencies. While MOUs generally do not have the force of law—and these two are no exception—they certainly pave the way for future action that could impact businesses in myriad ways. At this juncture, we can raise questions and identify concepts identified in both MOUs that employers should be cognizant of going forward:
Increased Information Sharing Could Have Far Reaching Effects – It could spur not only labor-related actions and charges falling under the NLRB’s jurisdiction, but also investigations by the DOJ and FTC given the mutual information sharing. In other words, issues that appeared germane only to labor law could morph into matters of interest to the DOJ and FTC. For example, an investigation by the NLRB concerning the classification of independent contractors could very well evolve into a matter of interest to the FTC given its recent interest in worker misclassification.
The Focus on the Gig Work and “Alternative Work Arrangements” – The FTC MOU specifically highlights “developments” around these two types of work, which could foreshadow future investigative and/or enforcement efforts against what either agency perceives as a misclassification of gig workers. While companies hiring gig workers should especially take note of this, all employers should also ensure that they have properly classified employees to ward off investigations and inquiries that could evolve beyond the initial charge.
Non-Competition and Non-Disclosure Covenants May Face More Scrutiny – While some states already effectively prohibit non-competition agreements, future action spurred by these MOUs may operate to restrain their use even further, especially if such agreements are shown to be anti-competitive and/or collusive. Indeed, even prior to entering into the MOU, the FTC has already signaled a willingness to go after anticompetitive non-compete agreements in the acquisition context, including ordering certain employers to eliminate non-compete provisions from their confidentiality agreements, and such orders are consistent with President Biden’s Executive Order, which tasked the FTC with curtailing the use of non-compete clauses “and any other clauses or agreements that may unfairly limit worker mobility.”
The Impact Mergers Have on Employee Conditions and Benefits – FTC Chair Khan specifically highlighted “anticompetitive mergers and unfair practices that deny workers and their families the pay, benefits, and conditions they deserve.” While the antitrust agencies have not historically focused on the effects of mergers to downstream labor markets in merger reviews, we may see changes in the near future. The agencies are actively working on revising their merger guidelines, and the revised guidelines may include a heightened focus on the competitive effects of proposed markets to the related labor markets, including impacts on employee conditions, wages, or benefits.
Further Federal Oversight of Algorithmic Decision-Making Tools – In addition to the EEOC—which issued technical guidance covering these tools that we covered here—the FTC and NLRB appear willing to also look at how these tools impact workers, which could revolve around to what extent these tools contribute to labor market concentration, or restrain or limit employee mobility.
The FTC and DOJ Are Investigating and Prosecuting Labor Violations Under the Antitrust Laws – the antitrust enforcers have been actively bringing cases against companies for alleged anticompetitive conduct in the labor and employment markets. The DOJ recently filed their first ever criminal indictments relating to alleged wage-fixing conspiracies and no-poach agreements, in addition to a civil case against the poultry industry for information-sharing to allegedly suppress worker compensation. We expect this enforcement trend to continue as the agencies cooperate with the NLRB in implementing the “whole-of-government” directive from President Biden’s Executive Order for addressing competition issues in the labor markets.
These represent a few salient considerations of the many that likely exist. What they confirm is that these two partnerships at least purport to cover a wide spectrum of employer activities, ranging from the impact of mergers and acquisitions on employees, to worker classification in the gig economy, to the potential anticompetitive effect restrictive covenants have on employee mobility, and more. As the Biden Administration continues to turn the President’s campaign promises of stronger worker protections into policy and executive action, these recent developments are likely the first of many. We will continue to monitor and report back with information concerning these partnerships, as well as any further developments.