High-tech firms sued over alleged non-recruiting agreements

With such intense competition for programmers and other highly skilled tech talent in Silicon Valley, many workers have become accustomed to frequent calls from competing tech companies trying to lure them away with bigger salaries. But recently the phones have stopped ringing for many of these employees, prompting an antitrust lawsuit against some of the most prominent tech firms.

The lawsuit claims executives at Adobe Systems, Intuit, Lucasfilm Ltd., Pixar and Apple formed secret anti-poaching agreements to avoid recruiting each other’s best workers. The plaintiffs claim that emails from Apple’s Steve Jobs and other executives offer evidence of these agreements. In one email provided to the U.S. Justice Department for a similar lawsuit in 2010, a former Google executive said the company had a policy of not recruiting from Apple. The email included a forwarded message from Jobs complaining that Google was trying to hire away an engineer at Apple. Another from an Intel CEO and Google board member describes a “handshake ‘no recruit'” between Intel and Google.

It’s based on a practice called cold-calling, in which company recruiters try to lure workers from rival companies with competitive salaries and perks. Bidding wars can then ensue, driving up salaries. In addition, cold-calling gives workers a sense of what they’re worth in the market. So when the calls stop, workers lose both leverage and knowledge of what salary they can demand. The lawsuit contends the executive agreements have kept wages artificially low by preventing bidding wars.

The companies’ attorneys have denied a conspiracy exists, but said some companies had separate one-to-one pacts as they worked together on business ventures. An attorney for Apple said that such arrangements were common.

The 2010 case included most of the same companies as the current lawsuit. Those companies settled without admitting they’d done anything wrong, but agreed not to enter into future agreements that would prevent cold-calling. Antitrust cases surrounding hiring practices can be very difficult to win, in part because it must be defined who makes up the class of workers being harmed by the violations. But if the plaintiffs are successful, tech workers could see substantial gains in both salary and perks.

Source: IndyStar.com, “High-tech firms fight nonrecruit allegations,” The Associated Press, Jan. 30, 2010