Labor and Healthcare Consolidation

The Problem

Many corporate or dominant healthcare systems use their positions in labor markets to suppress wages, degrade working conditions, provide worse benefits, and prevent workers from switching jobs to pursue better opportunities. This “monopsony” power occurs when a buyer has power — in this case, the healthcare systems use their power as a buyer of labor to harm workers.

Traditional antitrust law tends to ignore this sort of anti-competitive behavior and abuse. Guided by a “consumer welfare standard” for the past 40 years, federal antitrust law primarily seeks to intervene when consumers are harmed by higher prices, but generally ignores when workers are hurt through anti-competitive business and employer practices.

Similarly, many employers in healthcare use their advantaged bargaining position relative to healthcare workers to create unfair and anti-competitive employment terms. These include:

• Noncompetes, which prohibit employees from switching to work for competing healthcare providers, closing off important employment opportunities;
• No-poach agreements, in which different employers agree to not hire each other’s employees, so that healthcare workers have fewer opportunities;
• Arbitration agreements, which prevent employees from having access to justice in court; and
• Training Repayment Agreement Provisions (TRAPs), which require that healthcare workers pay their employers back for the costs of their own training. These are particularly common in healthcare.

The Solution

To diminish employers’ unfair control over healthcare labor markets, states can incorporate specific standards into any potential state antitrust law to enforce against the harms and abuses from monopsony power.

In strengthening antitrust protections for workers, states can also clearly state that unfair and anti-competitive employment practices — such as noncompete agreements, no-poach agreements, arbitration agreements, or training retention agreements (TRAPs) — are plainly prohibited as an abuse of dominance by the employer.

The Problem

Transforming hospital jobs and making them sustainable for workers and the economy will require workers to have a voice and increased bargaining power. Workers are entitled to form unions and collectively bargain for better wages and conditions without fear of discrimination from their employers. Nevertheless, healthcare workers often find that hospitals and other healthcare employers, even nonprofit ones, repeatedly violate their right to unionize. While they have sought relief before the National Labor Relations Board, they have not always been successful.

Legislators and the public have the right to expect cooperation from nonprofit or other publicly supported hospital systems when workers choose to organize. State legislators must step up to support and elevate workers’ efforts to improve their labor conditions.

The Solution

To strengthen workers’ rights to organize, states can pass and enforce labor peace laws. If the state or local government is funding a local project or facility, the state can require the operator of the project or facility to enter into labor peace agreements and abide by certain labor obligations. These can include:

• Requiring an employer to recognize a union based on signed cards, rather than by the results of a full union election;
• Requiring the employer to remain neutral and not express negative opinions or preferences about union organizing; and
• Requiring the employer to allow workplace access to union organizers.

With many nonprofit and publicly supported hospitals, the state can intervene in this way to ensure that healthcare workers are able to organize their workplaces and seek fair compensation for their work.

The Problem

Noncompete agreements — which restrict workers’ ability to be employed by a competitor of their current employer if they leave their job, often within a certain geographic distance — are a key way that healthcare employers prevent workers from changing jobs or using the threat of working for a competitor as a way to leverage higher pay, better benefits, or better working conditions. Particularly in the case of dominant hospital systems or corporate healthcare providers, workers bound by noncompetes find it impossible to switch jobs and yet remain in their field.

While noncompetes are harmful generally, the problem is most acute in healthcare, where large numbers of doctors and nurses are subject to noncompete agreements that trap them in their jobs.

The Solution

State legislators should ban the enforcement of noncompete agreements. Any such prohibition should include any “effective” noncompete agreement by another name. Such agreements that should also be prohibited include:

• Training repayment agreement provisions (TRAPs), which require that employees pay their employers back for the cost of their training. Such agreements prevent employees from being able to leave for better opportunities in their field, or outside of it.
• Notice period provisions, which require employees to give excessive notice before leaving for another job opportunity, limiting their effective ability to switch jobs.

Any law should also require that employers notify their current and past employees that any noncompete they had previously signed is no longer enforceable.

Model Legislation

California’s proposed AB 747 would ban noncompete agreements and other effective noncompete agreements.[1]

Notes

[1] California AB 747, https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB747.