FTC Takes Action Against Building Service Contractor’s No-Hire Agreement

The Federal Trade Commission today ordered building services contractor Guardian Service Industries, Inc. (Guardian) to stop enforcing a no-hire agreement that prohibits building owners and managers from hiring Guardian’s employees.

In a complaint filed against Guardian, the FTC alleges that Guardian—which operates in New York and New Jersey—includes no-hire agreements in its customer service agreements with residential building owners. These agreements prohibit building owners and competing building service contractors from hiring Guardian’s employees.

For hundreds of Guardian employees—which include concierge personnel, custodians, and maintenance technicians—these no-hire agreements limit their ability to negotiate for higher wages, better benefits, and improved working conditions, the FTC’s complaint alleges. Under Guardian’s no-hire agreement, building managers are prohibited from hiring Guardian employees even after the termination of a building’s contract with Guardian. Given Guardian’s no-hire agreement, in some circumstances, employees are forced to leave their jobs if the building they work at changes management, the FTC’s complaint states.

“Guardian, operating as a middleman, has restricted building owners and competitors from hiring workers while also forcing mostly low wage employees to accept unfair employment terms that restrain job mobility, wage growth, and their economic freedom,” said Henry Liu, Director of the FTC’s Bureau of Competition. “Today’s action restores competition by creating a level playing field for employers in the building services industry. The FTC will continue to investigate business practices that restrict accessible opportunities for workers.”

Under the FTC’s proposed consent order, Guardian must cease and desist from, directly or indirectly, enforcing a no-hire agreement or communicating to any prospective or current customer that a Guardian employee is subject to a no-hire agreement. Guardian can’t maintain or attempt to maintain, nor can it enforce or attempt to enforce, a no-hire agreement, the consent order states. The FTC worked closely with the New York and New Jersey Attorneys General offices throughout the investigation.

Additionally, under the proposed consent order, Guardian must:

• Provide notice to customers and Guardian employees with a copy of the FTC’s order that shows that the no-hire agreement is no longer in effect.
• Post clear and conspicuous notice to each new Guardian employee upon hire and in any shared Guardian employee space, such as a breakroom, stating that their employment will not be subject to a no-hire agreement.
• Take all steps necessary to void and nullify all existing no-hire agreements and notify Commission staff in writing that all existing no-hire agreements are voided and nullified.
• Not require any person who is party to an existing no-hire agreement to pay any fees or penalties relating to a no-hire agreement.

The Commission vote to issue the complaint and accept the proposed consent agreement for public comment was 3-2, with Commissioners Holyoak and Ferguson dissenting. Chair Lina M. Khan issued a statement joined by Commissioners Rebecca Kelly Slaughter and Alvaro M. Bedoya. Commissioners Holyoak and Ferguson each issued dissenting statements. 

The FTC will publish the consent agreement package in the Federal Register shortly. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions.