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Law firm Lieff, Cabraser, Heimann & Bernstein today announced the filing of a class-action lawsuit against Apple and other tech companies over "no solicitation" agreements that prevented the companies from attempting to hire away each others' employees. The lawsuit, filed by former Lucasfilm engineer Siddharth Hariharan, contends that the anti-poaching agreements limited career opportunities for and instituted artificial salary caps on employees at the companies involved.
"My colleagues at Lucasfilm and I applied our skills, knowledge, and creativity to make the company an industry leader," stated Mr. Hariharan. "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."
"Competition in the labor market results in better salaries, enhanced career opportunities for employees, and better products for consumers," stated [attorney Joseph] Saveri. "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 lawsuit alleges that the "no solicitation" agreements first surfaced in 2005 between Lucasfilm and Pixar, with Adobe, Apple, Google, Intel, and Intuit all joining the coalition that remained in place until at least 2009. The complaint seeks restitution for lost compensation and treble damages as punishment for the anti-competitive actions.
Specific claims of Apple's involvement in such anti-poaching agreements surfaced in August 2009 when a deal with Google was revealed. The U.S. Department of Justice finalized a settlement in September 2010 that barred Adobe, Apple, Google, Intel, Intuit, and Pixar from participating in such arrangements.
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This certainly sounds as if it has merit. It's a blatant circumvention of the "free market" that many politicians, voters, and businessmen openly and frequently support. Now let's see how many of them actually believe in the "free market" by supporting this suit. Or will they oppose this suit and expose themselves as actually being "pro business" and anti worker. It's funny how many forget that "free market" should apply to all portions of the economy, including the workers.
The details aren't clear, but if they ignore job applications from anyone currently working in one of the other companies in the agreement, that would be a major disadvantage for those employees.
Agreeing not to go after each other's top talent is a crime known as collusion, and more broadly it is the beginning stages of a trust. The competitive element of the market is completely destroyed if demand is being artificially suppressed.
Non-compete clauses are very tightly restricted in California. They only allow for trade secret protection and sensitive document protection. Thus, a former Pixar employee could not reveal to Lucasfilms what their next big project is, but he would be perfectly free to leave Pixar for Lucasfilms.
The Federal government settled a criminal prosecution. This is a civil lawsuit on the part of the injured employees.
I haven't taken a look at the full lawsuit yet, but I suspect that the plaintiffs are trying to make use of the Sherman Anti-Trust which allows for triple damages by default.
As for the posters getting worked up about the dollars at stake here, the amount of money is not the issue here. Seriously. The issue is opportunity.
It's one thing to accept a job and sign a contract with a no-compete clause. In that case, the employee is going into the situation fully aware, and usually the salary reflects that exclusivity.
It's another situation entirely if you get a job with Company A and afterward discover that your employment with Company A puts you on a blacklist for companies B, C, D, E and F — at least some of which you'd prefer to work for — for reasons that have nothing to do with your competency.
These companies could fix this situation simply by negotiating with current employees to add no-compete clauses that detail specific companies or types of companies. In return for the stability that the employers desire, the companies should have to include extra pay or perks for the workers to give up their right to seek employment elsewhere within a certain period of time. They could then make such clauses standard for new hires.
Edit: This is said with the presumption that this situation isn't limited to just wine-and-dine, come-work-for-us recruiting but also extends to exclude prospective job candidates who currently work for specific companies but are seeking new employment.
Let's say I want to work for Apple - well, maybe they won't contact me, or they'll send my CV that I send to them to the shredder without reading it through. All because of where I work now.
Bluntly speaking - that's crap.