Apple, Google & others could pay 'blindingly high' $9B in anti-poaching class-action suit
A class-action lawsuit from tech sector employees against employers including Apple and Google seeks some $9 billion in lost wages --?an astronomical sum that the complainants could ultimately receive, some believe, thanks to a mountain of evidence appearing to implicate Silicon Valley employers in an alleged no-hire cartel.
Steve Jobs and Eric Schmidt during the iPhone's introduction at MacWorld in 2007.
About 100,000 employees are involved in the lawsuit, seeking a payment of about $90,000 per person -- a payment The New York Times characterized this week as a "blindingly high number." But the employees are apparently confident in seeking $9 billion because the evidence against employers, who are accused of agreeing to anti-poaching agreements that may have been anticompetitive, and thus may have kept down employee wages.
As the class-action lawsuit progresses, strong evidence has emerged revealing that Apple, Google and others privately agreed to not recruit one another's employees. Late Apple co-founder Steve Jobs himself placed a call to Google's Sergey Brin in which he threatened "war" over recruitment efforts from the rival company.
Jobs also made similar requests of other top company execs like Edward Colligan, former CEO of erstwhile handset maker Palm. Colligan refused to enter any such agreement, however, saying that it was "likely illegal."
Materials from the trial also reveal that Apple's human resources department sent out an email identifying that Google employees were part of a "hands-off" list. Apple, Google, Adobe, Intel and others are accused of participating in an "overarching conspiracy" to keep employee wages down through anti-poaching agreements.
Privately, the accused companies reportedly believe the $9 billion sum is "extortion." But the 100,000 employees of the class-action suit are said to believe the evidence is "damning" and "embarrassing" enough that they could come away with a big payday.
Lawyers contacted by the Times said that while anti-poaching agreements in specific instances may be permissible, blanket bans such as the ones it appears Silicon Valley had in place are "plainly anticompetitive." And even tech company executives appear to have known the policy was potentially illegal, as former Intel CEO Paul Otellini said in one disclosed email that he would not like for the anti-poaching agreement to be "broadly known."
The class-action suit is scheduled to go to trial in San Jose in May. However, the parties involved are currently engaged in settlement talks out of court.
Apple and others made a last-ditch request to prevent the trial last month, but a judge denied their efforts and said the trial will proceed. The plaintiffs in the case were granted class status last October by U.S. District Court Judge Lucy Koh. Since then, the number of plaintiffs have ballooned from some 64,000 past and present employees to six figures' worth of workers.
The U.S. Department of Justice leveled its own lawsuit regarding the matter after investigating Apple, Adobe, Google, Intel, Intuit, and Pixar for the same anti-poaching measures. The defendants ultimately settled with the DOJ in 2010.
Steve Jobs and Eric Schmidt during the iPhone's introduction at MacWorld in 2007.
About 100,000 employees are involved in the lawsuit, seeking a payment of about $90,000 per person -- a payment The New York Times characterized this week as a "blindingly high number." But the employees are apparently confident in seeking $9 billion because the evidence against employers, who are accused of agreeing to anti-poaching agreements that may have been anticompetitive, and thus may have kept down employee wages.
As the class-action lawsuit progresses, strong evidence has emerged revealing that Apple, Google and others privately agreed to not recruit one another's employees. Late Apple co-founder Steve Jobs himself placed a call to Google's Sergey Brin in which he threatened "war" over recruitment efforts from the rival company.
Jobs also made similar requests of other top company execs like Edward Colligan, former CEO of erstwhile handset maker Palm. Colligan refused to enter any such agreement, however, saying that it was "likely illegal."
Materials from the trial also reveal that Apple's human resources department sent out an email identifying that Google employees were part of a "hands-off" list. Apple, Google, Adobe, Intel and others are accused of participating in an "overarching conspiracy" to keep employee wages down through anti-poaching agreements.
Privately, the accused companies reportedly believe the $9 billion sum is "extortion." But the 100,000 employees of the class-action suit are said to believe the evidence is "damning" and "embarrassing" enough that they could come away with a big payday.
Lawyers contacted by the Times said that while anti-poaching agreements in specific instances may be permissible, blanket bans such as the ones it appears Silicon Valley had in place are "plainly anticompetitive." And even tech company executives appear to have known the policy was potentially illegal, as former Intel CEO Paul Otellini said in one disclosed email that he would not like for the anti-poaching agreement to be "broadly known."
The class-action suit is scheduled to go to trial in San Jose in May. However, the parties involved are currently engaged in settlement talks out of court.
Apple and others made a last-ditch request to prevent the trial last month, but a judge denied their efforts and said the trial will proceed. The plaintiffs in the case were granted class status last October by U.S. District Court Judge Lucy Koh. Since then, the number of plaintiffs have ballooned from some 64,000 past and present employees to six figures' worth of workers.
The U.S. Department of Justice leveled its own lawsuit regarding the matter after investigating Apple, Adobe, Google, Intel, Intuit, and Pixar for the same anti-poaching measures. The defendants ultimately settled with the DOJ in 2010.
Comments
From: One Company CEO
To: Another Company CEO
CC: Some Executives
Subject: FW: Something Illegal
Hey, we are meeting to agree on this illegal activity. In our last meeting and phones calls we agreed on these illegal things.... So let not talk about this illegal activity by email. We don't want to create a paper trail.
Sincerely,
CEO
-----
Can it even get more stupid than this?
Although I do not support anti-poaching agreements, I can sympathize with the employers' dilemma here. Having your key employees being continuously recruited and scheduling meetings, is very distracting to the employee and I doubt they can focus 100% on their work while thinking about those opportunities. These employees are already getting paid the big bucks and they're aware of their value in the market, and if they're not happy with their current job, they can simply apply at another company and it won't be poaching.
Where's the actual damage to the employees?
From what I've seen this "agreement" doesn't prevent an employee from looking for work where they choose to - it prevents company A from actively trying to lure away an employee from company B. As such, I don't see how any employee could be harmed. Nobody is "forcing" them to stay with the company they're currently employed with.
Being able to look one one's own for a better job elsewhere is one thing. But a pact among employers to withhold information that there are better-paying opportunities for individuals has the practical effect of collusion to reduce compensation paid in the marketplace. It amounts to price-fixing on the buyers' side. Treble damages, anyone?
Many employees are required to agree to a 'non-compete' clause, and often held to it even if fired.
Scenario: Company A needs some employees with skill set X. They know company B has such employees, but because of this agreement they do not attempt to recruit employees from company B.
The employees never know of this opportunity. That hurts their wages and opportunity - maybe they're happy working for company B but would like the chance to work on company A's cool project, or company A has some minor perk that the employee would be willing to change jobs for (slightly shorter commute, better cafeteria).
Even if employees from B have resumes on file at A, they may get passed over because of this agreement.
Company A instead files for some H1-B visas because they "can't" find qualified employees in the U.S.
IMHO, the companies should get slapped and the employees get a nice Christmas bonus. Hopefully it won't all go to the lawyers and the employees get a $10 gift card to Starbucks.
- Jasen.
"may have" to me is a really loaded term. These actions may have kept their wages low because it may have resulted in the employees not being able to seek a higher paying job or it may have simply given the current employer the balls not to give them a raise.
But they may have not been hired for that job or may have not been given that raise anyway, because they didn't earn it.
To me the right or wrong of this matter depends on how the agreement was worded. If it was 'we will not ever ever consider hiring someone who is currently working for a competitor' that is wrong. If it was that they would not only not hire someone currently at a competitor but also 'someone that left a competitor within say the last year (in a firm and written down promise to all parties and followed consistently)', that is wrong.
To me, if the deal was 'we will not actively seek out those working for your company and attempt to get them to reveal how much they are getting paid, what projects they are working on (that might not be public knowledge yet) etc so that we might intentionally lure them away from you because they are working for you' then I don't see that as wrong. Such games are crude and impede actual work.
As for wages etc, to me it's crude and uncalled for that someone would, as implied, use job offers shoved at them by other companies as a tool to get more money. Get it cause you earned it not with what amounts to blackmail (Google is offering me $20k more a year, yeah i told them how much i make and no i don't care that that's against some stupid company rule. now pay me that much or I'll break my contract and go work for them)
Scenario: Company A needs some employees with skill set X. They know company B has such employees, but because of this agreement they do not attempt to recruit employees from company B.
The employees never know of this opportunity. That hurts their wages and opportunity - maybe they're happy working for company B but would like the chance to work on company A's cool project, or company A has some minor perk that the employee would be willing to change jobs for (slightly shorter commute, better cafeteria).
I don't recall anything in these deals that says they can't advertise for people. Or that employees of a company can't look for such advertisements. So how exactly does 'promise not to call up folks and tell them that there is a job opening' equate to them not knowing it exists. In this day and age it doesn't. If they have an interest in perhaps moving to another company then its on them to find the openings, using all the varied tools available to them
Free agency would be that reason. Professional sports leagues are exempt from many laws, antitrust being one of them.
My only question is, how is DoJ/Government going to use this money.
This is a class-action lawsuit filed on behalf of employees. The DOJ has nothing to do with it.
I hope the employees win and I hope they get their $9 billion. This sort of anti-competitive collusion needs to be severely punished.
My only question is, how is DoJ/Government going to use this money.
Oh man, don't go down that road...
Many employees are required to agree to a 'non-compete' clause, and often held to it even if fired.
This is what I don't understand about this situation. As an employee, co-founder, and VP in the software business for decades, I was always under non-compete agreements. Those agreements can and sometimes do list specific companies for which an employee is forbid to work at for a period of, typically, 18 months after the end of their employment with the company with which the non-compete is executed. So my question is, why didn't each company simply place every valued employee under a non-compete agreement listing specific competitors? And given that non-competes, of some sort, were likely in place for valued employees, who are the 100,000+ employees who are suing? Those who were not under non-compete agreements and would likely not have been recruited away anyway?
I don't recall anything in these deals that says they can't advertise for people. Or that employees of a company can't look for such advertisements. So how exactly does 'promise not to call up folks and tell them that there is a job opening' equate to them not knowing it exists. In this day and age it doesn't. If they have an interest in perhaps moving to another company then its on them to find the openings, using all the varied tools available to them
"agreed to not recruit one another's employees"
That goes to the definition of "recruit" and how deep the agreement on not hiring people away from each other went. Maybe there was a handshake, wink & a nod agreement that the companies would not hire employees from each other. So even if one did see the ad and apply, company A wouldn't consider your resume because you worked for company B.
"Materials from the trial also reveal that Apple's human resources department sent out an emailidentifying that Google employees were part of a "hands-off" list."
And, if "recruiting" is a standard business practice to obtain employees, and these companies agreed not to do it to each other, that's anticompetitive collusion and gets a slap.