FTC Orders Building Service Contractors to Stop Enforcing a No-Hire Agreement

The Federal Trade Commission today ordered building services contractor Planned Building Services and its affiliated companies to cease their enforcement of no-hire agreements that limit the ability of residential and commercial building owners from hiring building service workers employed by Planned.

In a complaint filed against Planned Building Services, Inc., Planned Security Services, Inc., Planned Lifestyle Services, Inc., and Planned Technologies Services, Inc. which do business as Planned Companies, (Planned), the FTC alleges the companies’ enforcement of their no-hire agreements, which are included in customer service agreements with building owners, has limited workers’ ability to negotiate for higher wages, better benefits, and improved working conditions. Under the no-hire agreements, building owners are forced to pay a penalty if they hire a Planned employee.

“Planned’s anticompetitive practices have unfairly restrained low wage workers from seeking higher pay, better benefits, and new job opportunities. Today’s action further underscores the FTC’s commitment to stopping unfair business practices that restrict workers’ economic freedom,” said Henry Liu, Director of the FTC’s Bureau of Competition.

Building service workers, which range from concierge personnel to janitors and maintenance technicians, employed by Planned suffer hardship if the building they work at changes management, as the no-hire agreement may force an employee to leave their job, according to the complaint.

The FTC’s complaint focuses on Planned’s conduct across New York City and New Jersey. This case marks the second action the FTC, in partnership with the offices of the New York and New Jersey attorneys general, has recently taken against anticompetitive no-hire agreements.

Planned’s no-hire agreements also limit building owners’ ability to switch to a competing building services contractor since the owner would risk losing any existing employees of Planned who could not continue at the building and work for Planned’s competitor without the new contractor paying a penalty given the terms of Planned’s no-hire agreement. This further restricts Planned’s competitors from making investments and meeting customer demand for increased quantity, quality, and variety of services, and ultimately harming consumers, the complaint states.

Under the FTC’s proposed consent order, Planned must immediately cease and desist from, directly or indirectly, enforcing a no-hire agreement or communicating to any prospective or current customer that a Planned employee is subject to a no-hire agreement. Planned cannot maintain nor can it enforce, a no-hire agreement.

Additionally, under the proposed consent order, Planned must:

• Provide notice to directors, officers, and employees with responsibility for hiring or recruitment of Planned employees or negotiating customer contracts with a copy of the FTC’s order that shows that the no-hire agreement is no longer in effect.
• Provide notice to new employees and in any shared employees spaces stating that their employment will not be subject to a no-hire agreement.

The Commission vote to issue the complaint and accept the proposed consent agreement for public comment was 5-0. Chair Lina M. Khan issued a statement. Commissioner Andrew N. Ferguson joined by Commissioner Melissa Holyoak issued a statement.  

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.