Knorr-Bremse and Wabtec: When the Next Employer Needed Permission

In the Knorr-Bremse and Wabtec no-poach case, a federal court ordered the companies to stop the recruiting and hiring restrictions alleged by the Justice Department. The government’s complaint described executives ordering a recruiter to stop contact, refusing to consider a candidate and making hiring discussions depend on the current employer’s approval. For someone inside recruiting, the striking part is whose approval mattered: the company the worker might leave.

Knorr-Bremse and Westinghouse Air Brake Technologies Corporation, known as Wabtec, were the defendants. Faiveley also figured in the alleged agreements and in Wabtec’s acquisition history. The allegations reached engineers and other employees, and the complaint’s examples crossed passenger-transit and freight-rail businesses.

No-Poach Agreements Where Recruiters Must Ask Permission

Under the alleged no-poach arrangements, recruiters needed the current employer’s permission before some hires could proceed. That gave the employer losing a worker a say in whether another company could pursue the hire.

The complaint described overlapping agreements involving Knorr, Wabtec and Faiveley, with different arrangements beginning by 2009, 2011 and January 2014. They restricted solicitation and, in some circumstances, hiring without approval.

A restriction on solicitation cuts off an approach to a worker. A hiring restriction can stop a candidate from being considered. A permission requirement gives the other employer control over whether the process can continue. The complaint described restrictions operating at these different points.

For a recruiter, the useful detail is the instruction behind the decision. Was the candidate removed from consideration because an executive invoked an agreement? Did a contact from the other employer cause recruiting to stop?

The Recruiter Was Told to Stop

The government alleged that senior executives enforced the Knorr-Wabtec arrangements directly, including when an outside recruiter approached a restricted employee.

In February 2016, according to the complaint, a Knorr executive-board member complained to a Wabtec executive officer about an external recruiter contacting a Knorr Brake Company employee for a Wabtec opening. The response went beyond discussing the particular contact:

The alleged instruction called for stopping the candidate’s recruitment and future approaches to Knorr employees. An outside recruiter had reached across the companies’ boundary; executives allegedly put that boundary back.

This is why the response to a recruiting contact can be as revealing as the original agreement. The complaint follows the decision from a rival’s objection, through an internal inquiry, to a stop instruction and a report back to the rival. A recruiter may see the last instruction. An executive or HR employee may know what prompted it.

A Freight-Rail Candidate Could Not Be Considered

The alleged arrangements also reached a freight-rail vacancy before the employer would consider the candidate. The complaint describes a July 2012 exchange at New York Air Brake Corporation: a senior executive told an HR manager that he could not consider a Wabtec employee because of the Knorr-Wabtec no-poach agreement.

That example concerns the decision to consider someone for a job, not just the initial recruiting call. According to the government’s account, the candidate’s existing employer was the reason consideration stopped.

The passenger-transit and freight-rail examples also show why a recruiting restriction can be visible in different parts of a business. An outside recruiter received a stop instruction in one episode. An internal HR manager received the refusal in another. Both allegations connect an individual hiring decision to an agreement between employers.

Where Faiveley Fits

Faiveley was part of the alleged network of hiring restrictions, including a separate approval arrangement with Wabtec Passenger Transit. The government described the arrangement in its complaint:

The Knorr-Faiveley relationship supplied a different episode. The government alleged that their no-poach agreement continued until at least 2015. After Wabtec announced its proposed acquisition of Faiveley in July of that year, a high-level Knorr executive directed recruiters in the United States and elsewhere to pursue Faiveley’s high-potential employees.

Under the government’s account, Faiveley’s employees went from off limits to recruiting targets after the acquisition announcement. The direction came from inside management.

The Same Control Appeared in High-Tech Recruiting

Apple and Google faced similar allegations that executives enforced recruiting restrictions through complaints to one another. In the government’s high-tech recruiting complaint, Apple allegedly complained about Google’s recruiting efforts, and Google investigated internally and reported back.

The government also alleged that the companies put one another on internal lists restricting cold calls. Those lists turned an agreement between companies into instructions a recruiter could follow. The rail-industry complaint describes a similar connection between executive contact and recruiting decisions.

The high-tech allegations concerned restrictions on direct solicitation and the competing offers and wage information recruiting can bring. The rail allegations also included approval before hiring and a refusal to consider a particular candidate. A cold-call restriction, a blocked candidate and a permission request show different points where employers can limit competition for a worker.

What the Civil Judgment Changed

The July 11, 2018 final judgment prohibited restrictive hiring and recruiting agreements and imposed compliance requirements on Knorr-Bremse and Wabtec.

When No-Poach Agreements Also Hold Down Wages

The VDA OC case added an express wage restraint to restrictions on nurse recruitment and hiring.

What This Means for a No-Poach Whistleblower

A no-poach whistleblower may know who requested permission, who could grant it and what happened to a candidate afterward. That account can connect a management agreement to the recruiting decisions it produced.

The Antitrust Division and Postal Service whistleblower reward program offers rewards in qualifying criminal antitrust cases. Our whistleblower experts work with you to assess how your evidence fits.

Where the evidence also involves false claims for government money, the False Claims Act may apply. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

Questions about confidentiality or your own role are matters our whistleblower experts handle with you.

You Saw Who Controlled the Hire

If hiring required a competing employer’s permission, tell our whistleblower experts who requested approval and what happened to the candidate.