An agreement between the Justice Department’s Antitrust Division and the Labor Department to “protect competition in labor markets” may spell big trouble for employers
Their focus will include “use of business models designed to evade legal accountability and business practices, such as illegal agreements to fix wages or inappropriate use of noncompete agreements, that cause direct harm to employees.”
The move follows release of a study that says wage setting results in wages that are 20% lower than in a fully competitive labor market, and noted that one in five workers is subject to non-compete agreements and twice that number say there were subject to noncompetes in the past. The report also cited “excessive occupational licensing requirements that impede their ability to switch jobs across states or their ability to enter a new occupation.”
You can expect the two agencies to focus on jobs that once were “in house’ but now are contracted out. The report says outsourcing reduces wages from 4% to 24% in some industries and occupations. It notes the incentive to do so — misclassifying workers enables employers to “labor costs and risks onto workers—for example, by avoiding unemployment insurance taxes and workers’ compensation premiums—and make it difficult for workers to organize or join a union and bargain collectively for better wages and conditions.”