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High Tech Firms Settle No-Poaching Case

by
John Zappe
Sep 24, 2010, 8:10 pm ET

Six leading high-tech companies have agreed to settle an antitrust claim arising from an arrangement among them not to poach each other’s employees.

The U.S. Department of Justice announced the settlement in Washington a few hours ago and simultaneously filed a civil antitrust action. Brought against Adobe Systems, Apple, Google, Intel, Intuit, and Pixar, the lawsuit details the alleged hiring arrangements. Accompanying the civil complaint was a proposed settlement in which the firms agree not to engage in anti-competitive no solicitation agreements.

The DOJ says the settlement “prohibits the companies from entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, or otherwise competing for employees.   The companies will also implement compliance measures tailored to these practices.”

The investigation was launched last year into recruiting collusion among a number of firms, including Google and Apple. The arrangement between the two firms, the Justice Department now says, began “no later” than 2006 when the two companies instructed recruiters not to cold call the other’s employees.

Similar arrangements existed, the Justice Department charged in the suit, among the other four companies. In a press statement the department issued, it said that in addition to the Google-Apple agreement, similar no-poaching agreements existed between Apple and Adobe, Apple and Pixar, Google and Intel and with Intuit.

Google didn’t issue a formal statement. But in a blog post, Amy Lambert, Associate General Counsel, Employment, said the company decided in 2005 not to “cold call employees at a few of our partner companies. Our policy only impacted cold calling, and we continued to recruit from these companies through LinkedIn, job fairs, employee referrals, or when candidates approached Google directly. In fact, we hired hundreds of employees from the companies involved during this time period.

“While there’s no evidence that our policy hindered hiring or affected wages, we abandoned our “no cold calling” policy in late 2009 once the Justice Department raised concerns, and are happy to continue with this approach as part of this settlement.”

However, the Justice Department, in its public statement on the settlement, said the recruiting arrangements among the companies “eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.”

The Associated Press reported that Adobe, Intel, and Intuit  issued statements denying they did anything wrong. Each said they were settling to put an end to the matter. Neither Apple nor Pixar, a company once run by Apple founder and current CEO, Steve Jobs, issued statements.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. Howard Adamsky

    Absurd to believe a company can poach employees.

    Want to keep your employees? Create a company that is so employee oriented, that they simply will not leave. Unwilling to do this? they your capital walks out the door.

    The very thought of attempting to control the market forces of talent through legal action is unconscionable.

  2. Maureen Sharib

    This is big Big BIG news for us phone sourcers!

  3. Rich Goldberg

    But if the employee has a noncompete the Google of the world will still be challenged.

  4. Keith Halperin

    From Silicon Valley.com:

    O’Brien: How dumb was the Silicon Valley hiring conspiracy? Let us count the ways
    By Chris O’Brien

    Mercury News Columnist

    Posted: 09/24/2010 06:17:58 PM PDT

    When I think of Google, Apple, Intel, Intuit, Adobe and Pixar, the words that come to mind are usually innovative and progressive.

    In the wake of their shocking settlement with the federal government Friday over charges they colluded to not hire each other’s employees, another word comes to mind:

    Dumb.

    It’s not just that their actions are shameful.

    It’s not just that these actions violate everything Silicon Valley represents.

    These agreements reveal a profound insecurity about their ability to compete on free and fair terms with one another.

    But more than that, these actions are unspeakably DUMB.

    How dumb was this ill-conceived and poorly executed conspiracy? Let us count the ways.

    1. There is no way that potential savings from these ridiculous schemes could have warranted the risks. Just how much money are we talking about saving by not losing a few important employees? Thousands? Chump change. Dumb.

    2. Whatever the costs, we’re talking about multinational corporations with billions of dollars in the bank. Really, they couldn’t dip into those rainy day funds to counter a few offers? It’s not just miserly. It’s dumb.

    3. We knew Apple was a bully. Turns out, it is an even bigger bully than we realized. According to the complaint: “Apple requested an agreement from Adobe to refrain from cold-calling each other’s employees. Faced with the likelihood that refusing would result in retaliation and significant competition for its employees, Adobe agreed.” Pissing off a key ally? Dumb.

    4. Now, everyone working at one of these companies has got to be thinking the same thing: “Did I get screwed?” That’s not exactly the kind of gung-ho, morale-building conversations you want going on. Dumb.

    5. Those who do think they got the shaft may sue. And because this is an antitrust finding, the settlement will allow anyone who wins in federal court to “recover three times the damages the person has suffered.” Say goodbye to whatever measly amounts the companies saved through these agreements. Dumb.

    6. People maintained lists. They kept records. According to the complaint: “Pixar instructed human resources personnel to adhere to the agreement and maintain a paper trail in the event Apple accused Pixar of violating the agreement.” Dumb.

    7. Under this settlement, the Justice Department gets to check up on the companies just about whenever it pleases. Thought the federal government was interfering too much before? Well, congratulations. It will get worse. Dumb.

    8. Did they really not think this would come to light? Dumb. Dumb. Dumb.

    Contact Chris O’Brien at 415-298-0207 or cobrien@mercurynews.com. Follow him at Twitter.com/sjcobrien or http://www.facebook.com/ChrisOBrienJournalist.

  5. Dennis Gorelik

    I did not think about “No-Poaching” agreement as a colluding practice.
    But it definitely is.
    Maureen and Keith — thank you you for pointing it out.

  6. Rich Goldberg

    Does permission to cold call extend to soliciting an employee at their place of business. Diluting a company’s productivity?

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    [...] other shoe is dropping in last year’s anti-poaching case the U.S. Department of Justice brought against six big-name tech firms, and it is falling most heavily on [...]

  8. Don’t blame headhunters – get better at keeping your employees | RPL international

    [...] it though. As many of you will have read previously, in September 2010 The U.S. Justice Department settled with Google, Apple, Intel, Adobe, Intuit, and Pixar over claims they colluded to not “poach” [...]

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