Providing Developments & Insight on Trending Topics in Employment Law

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Providing Developments &amp; Insight on Trending Topics in Employment Law

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Last week, the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB) <a href="https://www.ftc.gov/news-events/news/press-releases/2022/07/federal-trade-commission-national-labor-relations-board-forge-new-partnership-protect-workers">announced</a> that the agencies had entered into a new Memorandum of Understanding (MOU). The FTC press release touted the MOU as a big deal, stating that it would “bolster the FTC’s efforts to protect workers by promoting competitive U.S. labor markets and putting an end to unfair practices that harm workers.” The <a href="https://www.nlrb.gov/news-outreach/news-story/national-labor-relations-board-and-federal-trade-commission-forge-new">NLRB Press Release</a> was a bit less definitive, describing it as “a partnership between the agencies that will promote fair competition and advance workers’ rights.” And this week, the Department of Justice (DOJ) Antitrust Division <a href="https://www.justice.gov/opa/press-release/file/1522096/download">announced its own MOU</a> with the NLRB.

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Generally speaking, an MOU between two agencies does not allow the agencies to do something that they could not do otherwise. Agencies collaborate and work together routinely without the benefit of an MOU. An MOU may expedite the process and allow the agencies to collaborate more frequently with minimal procedural obstacles. What can be particularly important about an MOU, however, is the message it sends about future collaboration between the agencies and the areas of emphasis in the MOU. It is a message from both agencies that there are areas of mutual concern and that they share some interests, if not jurisdiction, in a related space.

The <a href="https://www.ftc.gov/system/files/ftc_gov/pdf/ftcnlrb%20mou%2071922.pdf">terms of the FTC/NLRB MOU</a> are fairly standard as far as federal MOUs go, with both agencies committing to interagency collaboration through information-sharing, coordinated outreach and cross-agency training. The preamble to the MOU emphasizes the purpose of the MOU, stating that it is to “better root out practices that harm workers in the ‘gig economy’ and other labor markets [and] to enhance the enforcement of federal laws and regulations administered by the agencies.” The MOU emphasizes that areas of common regulatory interest include “claims and disclosures about earnings and costs associated with gig and other work; the imposition of one-sided and restrictive contract provisions, such as noncompete and nondisclosure provisions; the extent and impact of labor market concentration; the impact of algorithmic decision-making on workers; the ability of workers to act collectively; and the classification and treatment of workers.”

For its part, the NLRB’s press release, quoting NLRB General Counsel Jennifer Abruzzo, stated that: “When businesses interfere with [workers’] rights [to act collectively to improve their working conditions], either through unfair labor practices, or anti-competitive conduct, it hurts our entire nation.”

The DOJ/NLRB MOU expresses similar goals and provides for sharing of information “to the extent permitted by law, regulation, Agency policy.” Notably, the DOJ/NLRB MOU contemplates referrals between agencies and states that “[f]ollowing a referral from the NLRB, the Antitrust Division will determine whether to open a civil or criminal investigation into the conduct.” Since the DOJ Antitrust Division has criminal prosecution authority under the Sherman Act, this cooperation and referral process may significantly raise risks for those under investigation by the NLRB. It will also be interesting to see how such referrals interplay with the DOJ’s Leniency Policy and how sharing of information plays out in criminal investigations.

This focus on labor is nothing new for the FTC and DOJ. Since 2016 when the DOJ and FTC issued joint Antitrust Guidance for Human Resource Professionals, labor issues have been a focus for DOJ and the FTC. This MOU is quite consistent with recent pronouncements from FTC and DOJ leadership and is also consistent with a <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/07/09/executive-order-on-promoting-competition-in-the-american-economy/">June 2021 Presidential Executive Order</a> on competition that emphasized, among other things, the importance of addressing competition issues in labor markets. Indeed, DOJ’s July 26, 2022 Press Release focused on this very point in discussing the DOJ/NLRB MOU: “[T]he agencies also achieve the objectives of the President’s Executive Order on Promoting Competition in the American Economy just days after the Order’s one-year anniversary.”

In September 2021, FTC Chair Khan <a href="https://www.ftc.gov/system/files/documents/public_statements/1596664/agency_priorities_memo_from_chair_lina_m_khan_9-22-21.pdf">communicated to staff via a memo</a> and set forth her visions and priorities, one of which stated that “antitrust and consumer protection violations harm workers and independent businesses as well as consumers.” She emphasized concerns about contractual arrangements where “[c]onsumers, workers, franchisees, and other market participants are at a significant disadvantage when they are unable to negotiate freely over terms and conditions.” And over the past year, we have seen FTC activity – on the consumer protection and competition sides – that focused on issues relating to workers, ranging from the initiation of a rulemaking relating to earnings claims and the filing of a <a href="https://www.ftc.gov/news-events/news/press-releases/2022/02/ftc-sues-burger-franchise-company-targets-veterans-others-false-promises-misleading-documents">franchise rule</a> case to competition cases focused on anticompetitive noncompete agreements.

Sometimes MOUs are announced, and the MOU is quickly put in a drawer and never heard from again. But MOUs can also be quite important and create a framework for decades of active interagency engagement. For example, in 1971, the FTC entered into an <a href="https://www.fda.gov/about-fda/domestic-mous/mou-225-71-8003">MOU with the Food and Drug Administration</a> (FDA), and that MOU still is in effect and gives the FTC “primary responsibility” for the advertising of foods, drugs (other than prescription drugs), devices and cosmetics, with the FDA having primary authority on labeling and other areas. This general split survives today. With respect to the NLRB/FTC/DOJ MOUs, it remains to be seen whether this is the beginning of extensive interagency engagement or just MOUs that lead to press coverage but little beyond that. But at a minimum, current NLRB, FTC and DOJ Antitrust Division leadership have emphasized their interest in a wide range of labor issues, especially those that affect the movement of employees between employers in the form of noncompete and no poach agreements, and these MOUs will allow both agencies to collaborate more freely with the NLRB and explore areas of joint interest. And at a minimum, it signals to industry that if it has issues with one agency, it may well quickly be in the crosshairs of a second agency.

FTC and DOJ MOUs with NLRB Reflect the Administration’s Ongoing Focus on Restrictive Labor Relationships and the Gig Economy