Lawsuit accuses Apple, others of 'conspiring' to keep employee wages low

Posted:
in General Discussion edited January 2014
A new class-action lawsuit takes aim at Apple, Google, Intel and other tech companies for allegedly "conspiring to suppress compensation of their employees."



The complaint was announced in a press release on Wednesday by the law firm Lief, Cabraser, Heimann & Bernstein. The suit was filed by Siddharth Hariharan, a former software engineer at Lucasfilm, one of the companies named in the suit. Other parties include Adobe, Intuit and Pixar.



"My colleagues at Lucasfilm and I applied our skills, knowledge, and creativity to make the company an industry leader," Hariharan said. "It's disappointing that, while we were working hard to make terrific products that resulted in enormous profits for Lucasfilm, senior executives of the company cut deals with other premiere high tech companies to eliminate competition and cap pay for skilled employees."



The new lawsuit alleges that the companies in question agreed to not actively recruit each others' employees, and promised to provide notification when making an offer to another company's employee. The suit also claims that the companies agreed to cap pay packages offered to prospective employees at the initial offer.



The complaint states that the alleged alliance began in 2005 with Lucasfilm and Pixar, and continued until at least 2009 with all defendants in a so-called "no solicitation" agreement. It asserts that the "conspiracy" decreased competition for labor among the competing companies.



"Competition in the labor market results in better salaries, enhanced career opportunities for employees, and better products for consumers," attorney Joseph R. Saveri said. "We estimate that because of reduced competition for their services, compensation for skilled employees at Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar was reduced by 10 to 15 percent. These companies owe their tremendous successes to the sacrifices and hard work of their employees, and must take responsibility for their misconduct."



The complaint, filed in a California Superior Court in Alameda County, seeks damages and lost pay for employees believed to have been affected by the companies' alleged actions.



In 2009, it was revealed that Apple and Google had an agreement that the two companies would not poach each others' employees while Eric Schmidt, then the search giant's chief executive, served on both boards. The "gentlemen's agreement" was said to prevent recruiting of other employees, but workers were free to apply at other companies. It eventually led to a U.S. antitrust probe of both Apple and Google.



An investigation conducted by the U.S. Justice Department found that Ed Colligan, a former chief executive of Palm, rejected an anti-poaching offer allegedly made by Apple co-founder Steve Jobs. In communications obtained, Colligan reportedly told Jobs that his proposal was "likely illegal."



Jobs allegedly told Colligan he was concerned when Jon Rubinstein, Apple's former senior engineering vice president, was named executive chairman of Palm. In the correspondence, Jobs reportedly said he was worried that Rubinstein would recruit existing Apple employees.
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Comments

  • Reply 1 of 52
    jd_in_sbjd_in_sb Posts: 1,481member
    Putting his name out their as a person who files high-profile lawsuits against potential employers will only make it more difficult to get a job in the future.
  • Reply 2 of 52
    sprockketssprockkets Posts: 796member
    A few weeks ago investors were disappointed that Google gave their employee's raises. Not sure if that means "no caps" but whatever.
  • Reply 3 of 52
    banalltvbanalltv Posts: 238member
    It sounds like career suicide for him alright but it sounds like he has a point.
  • Reply 4 of 52
    hirohiro Posts: 2,663member
    If he wins, which is quite likely based on other settled lawsuits like this recently in California he probably won't care. All it takes is a memo or email trail and this is an exercise enroute to a quiet settlement.
  • Reply 5 of 52
    8corewhore8corewhore Posts: 833member
    "Must. Not. Fight. People will be mad at you."



    Good on him for fighting.



    What these companies are doing is squashing the free market of wages.
  • Reply 6 of 52
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by 8CoreWhore View Post


    "Must. Not. Fight. People will be mad at you."



    Good on him for fighting.



    What these companies are doing is squashing the free market of wages.



    Oh, yeah. That's why wages are so low for computer professionals.



    Wages in Silicon Valley are HUGE compared to almost any other occupation requiring a similar level of training and skill. And that's even before you start looking at the thousands of Silicon Valley Millionaires.
  • Reply 7 of 52
    alienzedalienzed Posts: 393member
    Quote:
    Originally Posted by jragosta View Post


    Oh, yeah. That's why wages are so low for computer professionals.



    Wages in Silicon Valley are HUGE compared to almost any other occupation requiring a similar level of training and skill. And that's even before you start looking at the thousands of Silicon Valley Millionaires.



    As a computer professional, I'd like to hear you name some other occupations that require a similar level of training and skill that aren't as well paid please.
  • Reply 8 of 52
    I had heard about the agreement between Pixar and LucasFilm before.



    I've finally read about a lawsuit with merit involving Apple. Haven't seen one of those for quite some time.



    I would suggest to all the companies to simply settle.
  • Reply 9 of 52
    magicjmagicj Posts: 406member
    Quote:
    Originally Posted by jragosta View Post


    Oh, yeah. That's why wages are so low for computer professionals.



    The issue isn't if how much a computer programmer makes is high or low, it's whether or not the companies mentioned were involved in illegal activities.
  • Reply 10 of 52
    eyensteinnoeyensteinno Posts: 148member
    I would guess Steve Jpbs salary will now be doubled... to $2 a year.
  • Reply 11 of 52
    alienzedalienzed Posts: 393member
    On this topic though I agree... Apple has how many billions in the bank? I can say form experience that they don't pay their employees any more than any regular company. Share the wealth k?
  • Reply 12 of 52
    ecphorizerecphorizer Posts: 533member
    The fact is that these companies named in the lawsuit are just the tip of the iceberg in a massive talent scam by high-tech. They go beg congress for more and more H1-B visas for foreign nationals, then they recruit foreign nationals to come to the US under those visas, and in the agreement these individuals sign a contract for a certain wage, which may or may not be below prevailing wages of US citizens and permanent residents.



    I've seen H1-B visa holders living five or six together in small apartments using one or two cars for transportation around Silicon Valley. In talking with these colleagues I found that many of them are spending the least possible and sending the bulk of their wages back home.



    One result is fewer jobs for qualified citizens and resident aliens because they typically can't do without the higher wage, so they get priced out of a job.



    Another result is that one of them wises up and talks to an attorney. Is that person's career toast? Hardly. He'll just return home and end up getting a great job because he has "Silicon Valley" experience on his resume.
  • Reply 13 of 52
    robin huberrobin huber Posts: 3,202member
    It will be interesting to see the evidence. But wow, what a broad suit!
  • Reply 14 of 52
    ssls6ssls6 Posts: 49member
    Not recruiting from a competitor is not illegal. This happens all over including other forms of engineering. The person in question is free to solicit jobs from any company he wants, and those companies are free to hire him if they want, and they are free to pay him what they think he's worth. He just won't get a cold call from the internal headhunters of the other company.



    It cuts both ways, if you actively recruit from your competitor you can get sued for damaging the other company's business. Find their key guy, offer him the moon just to sabotage the other company and delay them somehow.
  • Reply 15 of 52
    suddenly newtonsuddenly newton Posts: 13,723member
    Quote:
    Originally Posted by AppleInsider View Post


    Jobs allegedly told Colligan he was concerned when Jon Rubinstein, Apple's former senior engineering vice president, was named executive chairman of Palm. In the correspondence, Jobs reportedly said he was worried that Rubinstein would recruit existing Apple employees.



    A legit concern, because Steve did exactly that when he left Apple in 1985: he recruited Apple people to join NeXT.
  • Reply 16 of 52
    Hmmm -- wonder if this obviously named Indian/Pakistani fellow was hired at a *less than* prevailing engineering compensation rate, due to his H-1B work visa status?



    If so, then he was occupying an engineering job slot that likely paid BELOW the rate normally expected/paid to non-H-1B (read: citizens) workers.



    Am curious as to his citizenship, and work status.





    Niffy
  • Reply 17 of 52
    newbeenewbee Posts: 2,055member
    Quote:
    Originally Posted by Suddenly Newton View Post


    A legit concern, because Steve did exactly that when he left Apple in 1985: he recruited Apple people to join NeXT.





    Did he "recruit them" .... or did they beg SJ .... 'Please ... take me with you .... Apple is doomed' .... or words to that effect ... I wasn't there so I don't know ... were you????
  • Reply 18 of 52
    magicjmagicj Posts: 406member
    Quote:
    Originally Posted by newbee View Post


    Did he "recruit them" .... or did they beg SJ .... 'Please ... take me with you .... Apple is doomed' .... or words to that effect ... I wasn't there so I don't know ... were you????



    Well, we all know Apple was growing at the time Jobs left Apple, just as it is growing now that Jobs is on medical leave.



    Maybe those employees were saying "Apple is doomed". But if so, their feelings weren't based on any available financial information at the time.
  • Reply 19 of 52
    Quote:
    Originally Posted by Ecphorizer View Post


    The fact is that these companies named in the lawsuit are just the tip of the iceberg in a massive talent scam by high-tech. They go beg congress for more and more H1-B visas for foreign nationals, then they recruit foreign nationals to come to the US under those visas, and in the agreement these individuals sign a contract for a certain wage, which may or may not be below prevailing wages of US citizens and permanent residents.



    In the defense industrial contractor tech community, the H-1B hires are required to be payed a certain amount that represents a minimum threshold number that is usually 10%-15% less, in my recollection -- having dealt with this issue in the past. Check the more recent H-1B/FAR law for specifics, as I am quoting from memory, circa 2000 time frame.



    For instance -- I was ordered by my boss to reduce my employee costs. Boss set up a visit to an H-1B "body shop," where I interviewed several qualified candidates. I chose two H-1B body shop candidates, and released two of my low-mid level American citizen programmer employees, who each cost me $52K plus full benefits per year. The federal rules required that I pay the H-1B rate of 42K or so, per year, for the H-1B replacements (circa Y2000). However, since I was "renting" the two H-1B programmers, I paid the 42K to the Indian body shop, NOT the H-1B programmers themselves. Secondly, I was also not having to pay for benefits of any sort for these two H-1B programmers, which reduced my overall employee costs further.



    After I got to know the two H-1B Indian programmer individuals, they revealed to me that they were only being paid 22K per year by the Indian body shop, presumably with the Indian body shop pocketing the difference from the 42K/yr rate that my organization paid.



    Quote:

    I've seen H1-B visa holders living five or six together in small apartments using one or two cars for transportation around Silicon Valley. In talking with these colleagues I found that many of them are spending the least possible and sending the bulk of their wages back home.



    EXACTLY what my two Indian body shop H-1B programmers told me -- they, too, were living with a third H-1B person, sharing one beater car, and sending their money back to India.



    Quote:

    One result is fewer jobs for qualified citizens and resident aliens because they typically can't do without the higher wage, so they get priced out of a job.



    Yup. And folks wonder WHY companies like Microsoft/Bill Gates and other big American tech corporations whine that they are having a difficult time finding "qualified" American citizen engineering staff -- and WHY computer science and software engineering programs at some number of colleges and universities are finding less interest from rising high-school grads as a potential field of study/career path.



    Quote:

    Another result is that one of them wises up and talks to an attorney. Is that person's career toast? Hardly. He'll just return home and end up getting a great job because he has "Silicon Valley" experience on his resume.



    Disgustingly true.





    Niffy
  • Reply 20 of 52
    anantksundaramanantksundaram Posts: 18,747member
    Quote:
    Originally Posted by Niff Stipples View Post


    Hmmm -- wonder if this obviously named Indian/Pakistani fellow ......



    Ah. 'Siddharth'. Sounds like ona dem brownies. No difference, could be Indian, Pakistani, Sri Lankan, Bangladeshi, Nepali, Bhutanese, whatever. Just like there's no difference between dem Brits or Icelanders or Norwegians or Canadians or French or whatever. And, no way a Siddharth could be a US citizen -- that's reserved for dem Brits or Icela.... (Never heard of Google either).



    /sarcasm
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