Few HR professional realize that the conduct of formal and informal compensation surveys (meaning as simple an act as calling a competitor to find out what they pay their cost accountants -- or the more sophisticated questionnaire-based data collection efforts) is regulated by the Sherman Antitrust Act of 1890. For this reason, and to keep us all clear of unnecessary litigation, I thought it might be worth a post.
The Sherman Antitrust Act, named for its author, Senator John Sherman of Ohio, was original passed to limit monopolies and other restraints on commerce. It is the Act's provisions on pricing and competition which impact those seeking information on compensation practices via salary surveys. The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), which have primary responsibility for enforcing our nation's anti-trust laws, have determined that organizations conducting their own salary surveys could be seen as practicing illegal price-fixing.
To guide HR and compensation professionals seeking to determine competitive pay levels while avoiding antitrust violations, the DOJ and the FTC have jointly published a series of Anti-Trust Safety Zone Statements, which have been interpreted (through not extensively tested in court) to provide a "safe harbor" for organizations involved in this exchange of information.
The DOJ/FTC Antitrust Safety Zone Statements are as follows (note that these were initially developed with health care organizations and activities as their focus):
Antitrust Safety Zone: Exchanges of Price and Cost Information Among Providers That Will Not Be Challenged, Absent Extraordinary Circumstances, By The Agencies
The Agencies will not challenge, absent extraordinary circumstances, provider participation in written surveys of (a) prices for health care services, or (b) wages, salaries, or benefits of health care personnel, if the following conditions are satisfied:
- The survey is managed by a third-party (e.g., a purchaser, government agency, health care consultant, academic institution, or trade association);
- The information provided by survey participants is based on data more than 3 months old; and
- There are at least five providers reporting data upon which each disseminated statistic is based, no individual provider's data represents more than 25% on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider.
For more information:
For WorldatWork members, see the One Stop Topic page for Market Pricing/Salary Surveys