The Department of Justice has announced a settlement with Adobe, Apple, Google, Intel, Intuit and Pixar over charges that the Silicon Valley firms had an informal set of agreements not to hire away each other’s top talent.
The settlement specifically prevents the six firms from entering into any so-called no-solicitation agreements in hiring employees.
According to the DOJ’s original complaint, the companies had an understanding that kept them from directly soliciting each other’s employees. If true, the practice could have had the effect of keeping wages and opportunities down because it would prevent the kind of true competitive bidding for talent that would occur without such backdoor agreements.
In a news release, the DoJ said that one of the main ways high tech companies recruit highly-prized employees is to cold call them directly. This form of competition for talent, when unrestrained, results in better career opportunities, the DoJ said.
According to the complaint, the companies engaged in a practice of agreeing not to cold call any employee at the other company. The complaint indicates that the agreements were created and actively managed by senior executives of the six companies.
The DoJ’s Antitrust division filed a civil antitrust complaint Friday in U.S. District Court for the District of Columbia, along with a proposed settlement that, if approved by the court, would be in effect for five years and resolve the lawsuit.
“The agreements challenged here restrained competition for affected employees without any pro-competitive justification and distorted the competitive process,” said Molly S. Boast, deputy assistant attorney general in the DoJ’s Antitrust division. “The proposed settlement resolves the department’s antitrust concerns with regard to these no solicitation agreements.”
DoJ details “do not call” lists
The DoJ also detailed a number of examples it said proved the companies had a cozy understanding to not solicit each other’s employees.
For example, beginning no later than 2006, Apple and Google executives agreed not to cold call each other’s employees, according to the DoJ. Specifically, officials said that Apple placed Google on its internal “do not call list,” which instructed employees not to directly solicit employees from the listed companies. In a similar way, Google listed Apple among the companies with which it had special agreements and were part of the “do not cold call” list.
Google also counted Intel among the companies with which it has special agreements and part of its no-call list. Intel followed suit, allegedly instructing its human resources staff about the existence of the agreement.
While the original complaint focused on the ban on the cold calling, the proposed settlement is much broader in scope. Specifically, 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 DoJ said in a statement.
The settlement also requires all six companies to implement compliance measures to make sure the new agreement is adhered to.