Conventional economics teaches that wages are determined by labor supply and demand. There is, in fact, a lot more at play—and not all of it is legal.
Growing evidence has emerged of a practice that has come to be called wage fixing. This is what happens when companies in an industry coordinate compensation practices for certain jobs, making it difficult for workers attain higher earnings by switching employers. Sometimes the companies agree on actual caps; other times they simply share salary data so that a firm can avoid paying more than its competitors.
Federal prosecutors have been slow to investigate the practice, so the main legal challenges have come from private litigation filed by class action lawyers. Their latest success has just emerged from a federal court in Maryland, where utility company NextEra Energy and its subsidiary Florida Power & Light have agreed to pay $9.5 million to settle wage-fixing allegations.
NextEra is just one of two dozen companies sued by lawyers representing both hourly and salaried workers at nuclear power plants around the country. In a complaint filed last year, the plaintiffs alleged that the companies “engaged in a multi-faceted conspiracy to align, fix, and suppress Class Members’ compensation.” NextEra is the first defendant in the case to settle.
As documented in Violation Tracker, wage-fixing lawsuits have been brought on behalf of various types of workers. One of the biggest actions targeted the poultry industry. A dozen major producers have paid out over $270 million, with the largest individual settlements coming from Tyson Foods ($115 million) and Perdue Farms ($60 million).
A group of Detroit-area hospitals paid more than $50 million to resolve allegations they conspired to depress the wages of nurses.
Wage-fixing lawsuits are closely related to no-poaching cases in which employers are accused of secretly agreeing not to hire each other’s employees, thus exerting downward pressure on wages. The first major action of this sort was resolved a decade ago, when tech giants Apple, Google, Intel, and Adobe Systems together agreed to settle the matter for $415 million.
In 2017 Walt Disney and its subsidiaries Pixar and Lucasfilm agreed to pay $100 million to settle litigation accusing them of engaging in a no-poach agreement with other studios with regard to the hiring of animators.
Two years later, Duke University agreed to pay more than $54 million to settle litigation alleging it entered into an improper no-poach agreement with the University of North Carolina not to try to hire medical school faculty members from each other.
In 2024, Jackson Hewitt agreed to pay over $10 million to settle litigation alleging its franchisees entered into a non-poach agreement regarding the hiring of tax preparers.
Last year, the Pratt & Whitney unit of RTX Corporation agreed to pay $34 million to settle litigation alleging it participated in an improper no-poach agreement among federal contractors not to hire one another’s aerospace engineers.
State attorneys general have begun to get in on the action. For example, the New York AG got Stewart Title Guaranty Corporation to pay $2.5 million to settle allegations it participated in a no-poach arrangement with competing title insurance firms.
It used to be common for unions to negotiate with major corporations in an industry to raise wage and benefit levels across the sector. Now employers collude among themselves to depress compensation rates. That’s a far cry from a free market.
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