Following this and other recent statements by antitrust enforcers, many companies have wondered whether they face latent antitrust risks stemming from their human resources department. Often, the members of human resources teams are not subject to the same levels of antitrust training as their co-workers in other parts of the company. As a result, they may be less sensitive to the sorts of information exchanges that would raise concerns in other areas of the business. It seems this is particularly true when considering the use of benchmarking, which is quite common in many human resources departments to determine appropriate salaries and benefits for employees.
When it comes to benchmarking, many companies have considered whether it is safe to participate at all given the recent governmental posture. In most cases, however, a complete ban on use of benchmarks would go beyond any concern that the DOJ and FTC have identified. Instead, it remains the case that benchmarking becomes problematic where the participating companies would somehow use it to dampen competition for employees, resulting in lower wages or reduced benefits being offered. In order to assist companies in evaluating where to draw lines, we have developed a few general antitrust principles that can be used to train human resource professionals and guard against antitrust concerns.
First, companies should have a policy for review and approval of sources of data to be used for benchmarking. This involves vetting the data provider and ensuring that the data being received is appropriately anonymized and historical. It should also confirm that the data being provided (if any) is appropriate and not unnecessarily sensitive given the context. This will almost always be a function of the legal department or outside attorneys in the first instance.
Second, companies should have policies around the use of benchmarking data, clearly specifying that the company makes its own decisions independently about setting rates, prices, salaries and benefits. Employees should be trained that while the data can be a helpful tool, it is always the company’s responsibility to make a final decision – as opposed to merely setting rates based on a third party data set.
Third, companies should train employees not to misuse benchmarking data. One common issue that comes up in this regard occurs where an employee decides to contact a counterpart at another company to check on a data point, confirm something, or see if the other company has contributed to the survey. Generally speaking, any type of confirmatory contacts with competitors (especially including companies that might hire from the same talent pool) should be prohibited.
These general guidelines on benchmarking should supplement other key antitrust principles, including the concept that it is never acceptable to agree with another employer on the wages or salaries that each will offer or their associated benefits packages. A proactive approach to these issues is critical in order to mitigate antitrust risks in the current environment.