Lawsuit Claims Technology Industry Bigwigs Had Secret Anti-Poaching Pact To Keep Employee Salaries Low

The ability to play employers off bids from other companies seeking to snag the best in their fields is an important one. So much so, in fact, that workers in Silicon Valley have filed a lawsuit alleging that some of the industry’s biggest players were involved in a secret anti-poaching pact that kept salaries down and workers stuck where they were.

In a lawsuit naming executives at Google, Intel, Adobe, Intuit, Lucasfilm, Pixar and Apple, programmers claim those companies violated antitrust laws by agreeing not to try to hire each other’s best workers, says the Associated Press. With no one trying to hire them away, employees couldn’t use that leverage to ask for higher wages.

The plaintiffs aren’t just mad at the companies in general –¬†Steve Jobs himself is named in the suit as allegedly putting together some of the “gentlemen’s agreements” while he was CEO at Apple.

Similar allegations were investigated by the Justice Department in 2010, and included all the same companies aside from Lucasfilm. That case was settled without the companies admitting any wrongdoing, but they did agree not to enter any such future agreements that would prevent them from recruiting other’s employees.

The defense teams for the companies are claiming that any agreements can be explained by collaborative efforts between businesses on a one-on-one level, and not some big conspiracy worked out in an underground lair amidst cackles of evil glee.

Suit claims Silicon Valley anti-poaching scheme [Associated Press]

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  1. Evil_Otto would rather pay taxes than make someone else rich says:

    Companies colluding to screw over people who do actual work? Next you’ll be telling me the sky is blue.

  2. milkcake says:

    O look, Microsoft is not one of them. How surprising! (Not sarcasm)

    • Firevine says:

      I had a similar reaction to HP not being on the list. I figured if there were some scummy business dealings to get involved in, they would be first in line.

    • Coffee says:

      Microsoft’s main campus is in Redmond, WA, whereas most of these companies are located in the Bay Area…I’m guessing that collusion is more common when you’re all close to one another, as it’s far easier for employees to switch employers without having to uproot their families.

  3. TheMansfieldMauler says:

    A few political donations will make this quickly go away.

  4. Cat says:

    When my company moved into its present location, they poached a considerable number of low wage employees from the existing business next door. After about a year, this stopped, and rumor has it this same sort of agreement was reached among several companies here in related businesses.

    Now, things have turned full circle and people are looking to jump ship here (me included). And though there are openings next door, nobody from here is getting hired there (including me).

  5. Dallas_shopper says:

    They should also investigate how the use of H1-B workers has kept salaries in I.T. artificially low.

    (Said the person who has been in I.T. since 1998.)

    • Jevia says:

      For jobs unable to be shipped to India, they import people from India.

      • LMA says:

        The Washington Post just had an article on precisely this topic, but it focused on high level Visas being given to Chinese nationals, not Indian.

      • Dallas_shopper says:

        I’m sick of the second-rate H1-Bs thronging my office. Seriously. They have no sense of humor, refuse to OWN anything, do second-rate shitty work, and are general killjoys. They will also punt ANYTHING to ANYONE as long as they don’t have to do anything with it.

        Oh, and there’s a reason why a lot of them work more than 40 hours a week. It’s because it takes them 60 hours to do what I can do in 30.

        Obviously there are exceptions, but this is what I’ve observed in 14 years in I.T. so I do have some idea what I’m talking about. The H1-Bs are the types who will post desperate-sounding messages on industry forums with stupid questions like “How do I eliminate duplicates from this query? Please provide detailed examples.” Basically this translates as “Do my job for me for nothing, please.” I’ve seen it more times than I can count. It makes me sick.

        When I’m on call and there’s a massive job failure, 9 times out of 10 it’s for something that either an H1-B or outsourced resource produced. They’re responsible for maybe half of what’s out there but account for 90% of the problems. What does THAT tell you?

  6. exconsumer says:

    Remember, there is no class warfare.

  7. dolemite says:

    As someone in the tech/programming/data biz…I’ve always thought we should have a really strong union or organization. You know…since our services are pretty much indispensable, yet somehow we are treated like slave labor sometimes.

    • Dallas_shopper says:

      I’d join.

      I’ve thought on and off about getting out of I.T. entirely for several years now because working conditions keep getting worse and worse; it looks like the industry is going the permatemp/Calcutta sweatshop route.

    • Nigerian prince looking for business partner says:

      It’s amazing just how quickly the tides changes when it comes to careers.

    • Loias supports harsher punishments against corporations says:

      Employment law is actually pretty generous to you. IT personnel have provisions in FLSA, including minimum wage and hours, and a good definition of job duties (to ensure if you do an IT job you get paid for it, and not minimum wage).

      • Nigerian prince looking for business partner says:

        There’s a separate minimum wage for IT workers?

        • Loias supports harsher punishments against corporations says:

          Yes. If you fit the job duties described in the FLSA for technology workers, there is a minimum per-week salary you must earn. I do not believe you must be a salaried worker, but you do have a specified minimum weekly wage.

          • Nigerian prince looking for business partner says:

            I just read the document and it seems to be describing something different. It looks like IT workers are exempted from minimum wage & overtime laws if the meet certain criteria and it doesn’t have anything to do with setting wages.

            • Loias supports harsher punishments against corporations says:

              “To qualify for the computer employee exemption, the following tests must be met:
              ‚Ä¢The employee must be compensated either on a salary or fee basis at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;”

              • Loias supports harsher punishments against corporations says:

                To clarify, this means that if you don’t meet this criteria, you cannot be a salaried employee and are not exempt from minimum wage and overtime provisions.

                So if they are going to work you 60 hours a week, you either have to be paid $27.63 an hour or you get the overtime. IT jobs rarely go below $20 as it is.

                • Mit Long says:

                  – The employee must be compensated either on a salary or fee basis at a rate not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour;

                  Why the big difference if you’re salaried compared to the hourly rate? An hourly rate of $27.63 comes out to $1105.2 per week, compared to $455 per week if you’re salaried.

                  The difference is so massive I have to assume I’m missing something…

                  • Loias supports harsher punishments against corporations says:

                    That is for when you are not paying an employee full time. This would be for a computer consultant.

        • Loias supports harsher punishments against corporations says:
      • dolemite says:

        My biggest gripe is hours. Sure, pay in many IT fields is decent (not what it was once before), but they can totally tear your life apart over hours. “Hey, crunch time guys…going to be a few 70 hour weeks for awhile. Oh, and expect your regular pay since you guys are immune to overtime laws.”

        Then, 50 ,60 ,70 hours “for a few weeks” or months turns into 50,60,70 hours permanently, and suddenly, that “decent” paying job turns into $11,$12 an hour, whereas if you had some $11 an hour job working 20-30 hours of overtime, you’d come out ahead.

      • coffee100 says:

        Whoops, spoke too soon.

  8. u1itn0w2day says:

    Could be called a form of price fixing as well.

    And as crucial as Jobs was to the industry he was a very shrewd and ruthless businessman as well.

  9. Duke_Newcombe-Making children and adults as fat as pigs says:

    I’m confused. The Invisible Hand o’ the Free Markets‚Ñ¢ will certainly sort this all out, won’t it?

  10. scoutermac says:

    Imagine that. We want your services but we do not want to pay for them.

  11. FreeMarketFan says:

    So people are crying that head hunters aren’t knocking down their doors?

    You can actually, you know, look for other jobs and even apply for them. Isn’t that a crazy notion. Then after you get an offer from the company you can either take it or use it as leverage at your current place.

    Oh wait – UNIONS! Unions are the answer.

    • pk says:

      I would assume that if you applied for a job at one of these companies, and they saw where you presently worked they would not hire you due to said agreement. If you are indeed a “FreeMarketFan” you should be against this tampering of the free market.

    • VintageLydia says:

      Are totally unaware on how anti-sniping policies work? The emplyees CANNOT do as you suggest because all competing employers will not hire them regardless of how awesome/qualified/etc they are.

    • backbroken says:

      Hope you are a troll.

      I really, really hope.

      For your sake.

    • Kate says:

      Um, do you ever even bother to read the articles first for comprehension freemarket fan? Or do you need some terms explained?

  12. Phil Keeps It Real [Consumerist] says:

    From the looks of it, iCat has eaten a few of the laptops & ipod’s, hence why he has a stand-by MacPro !

  13. u1itn0w2day says:

    Instead of rigging the game how about just trying to compete or give your current employees a reason to stay. If you can’t compete with salaries & benefits in your industry maybe you should get the f out then. Or do it on a smaller scale.

  14. Maltboy wanders aimlessly through the Uncanny Valley says:

    This is where I draw the line. The corporate fatasses responsible for this should fry.

  15. absherlock says:

    I know this is probably an unpopular perspective but what if the companies are doing it, not to keep employee salaries low, but in order to cut down on loss to the company in terms of retraining, time without employees, etc.? I mean, what if this is all just a truce among the companies in order to avoid having to deal with the headaches of having your employees poached and the lack of salary competition is just a byproduct of that? I know it doesn’t change the end result, but it does alter the intent…

    • exconsumer says:

      Well, not really. Employees are not commodities to be traded or have gentleman’s agreements about. By colluding, they are barring these employees from a truly competitive marketplace to help their bottom line. Not an ok thing to do.

      • absherlock says:

        Why aren’t employees commodities? I mean, I realize that people aren’t objects to be owned, but if time or money or effort is put into making these employees useful to the company (or, more importantly, other companies) why shouldn’t the company be able to protect their investment?

        I’m not up on the law involved here but is it okay for companies to get together and decide they’re all going to freeze out a single supplier? If so, wouldn’t that be barring those companies (and their employees and owners) from a competitive marketplace?

        • exconsumer says:

          Because the individual employee also has a bottom line. Sure, it might be bad for the company but that’s the price of doing business. Sometimes your investments don’t pan out. Sometimes you get undersold. Sometimes someone else gets the better deal.

          These are all things that we as individuals are told to expect from the marketplace. It is unfair in the extreme to allow companies to collude their way out of paying the market price for an employee. They can and should protect their investments, not by rigging the market, but by paying the true cost of their investment.

          • absherlock says:

            Yet employees can take the investment made in them by someone else and parlay it into big bucks? I’m not for indentured servitude, but it seems like you’re saying companies are only allowed to look after the bottom line if they do it in a way that’s “fair” to the employees while employees are allowed to do whatever’s best for them, screw the company. Just doesn’t seem fair.

            • exconsumer says:

              Then they can ask employees to sign a contract to that effect. Then everyone would know what they were getting into. Colluding to fix wages is not ok.

              This behavior undercuts the whole free-market narrative and you know it. Study hard, work hard, be the best in your field and one day you can make the big bucks because the market will value you more. But then one day you get a little too valuable and those with all the money can just decide to put a ceiling on your earning power that has nothing to do with the demand for your skills? That’s inhuman, and creates a second class citizen out of everyone without the power to fix wages.

              How on Earth is that fair? How on Earth is that a meritocracy? It is the opposite. It is rule by force. It is indentured servitude exactly. Shame on you for defending it.

              • absherlock says:

                I’m not defending anything, I’m asking questions. I’m not an economist or a lawyer and I don’t have any kind of high-level job (I’ve actually been a stay-at-home dad, by choice, for the past six years). But I’m also not willing to accept that something’s right or fair just because it benefits me or wrong and unfair because it doesn’t. I’m sorry if that upsets you.

                • exconsumer says:

                  Thanks for taking it easy. After I cooled off I realized there’s no reason to shame on anybody. I’m sorry. I’m sure you mean the best.

                  But it’s not just that it benefits you, it’s everyone. Think of it this way: What if all the employers in the country got together and decided that they wouldn’t pay anyone more than minimum wage for any job ever? You’d have a few people, only by virtue of their wealth, warping the heck out of the market. They’d save money, sure, but what would it do to the rest of the economy? And what would it do, long term, to people’s drive towards more marketable skills? This kind of thing shouldn’t happen on any scale.

        • coffee100 says:

          “Why aren’t employees commodities?”

          Oh FUCK.

    • physics2010 says:

      Employee retention is about more than just chaining them to their desks.

      • absherlock says:

        Agreed, but it’s tough to argue that companies should employ better forms of employee retention (i.e. loyalty) while those very employees are offering to sell out the company for a few bucks.

        Perhaps a better idea (especially at this skill level) would be contracts, like in professional sports. You sign for a year (or whatever) and when you’re time is up you can negotiate with whoever you want.

        • exconsumer says:

          Contracts are fine, then everything is above the table.

          And employees aren’t committing some special sin by going to the highest bidder. They are entitled to as high a profit for their goods and services as they can fairly negotiate. . . just like the companies they work for.

      • LMA says:

        Hey, that’s why Foxcomm mounted all of those acrobatic performer nets outside the windows!

    • Solkanar512 says:

      These companies expect you to know everything before you walk in the door, so nope.

      • absherlock says:

        I’m thinking you’re probably right as I get the feeling this involves higher level employees that are expected to hit the ground running. Still, if you were Microsoft and Google “steals” a project lead from you, how does that affect your project? Is it worth it for you (and other companies) to forgo the possibility of getting a “better” employee to maintain the project continuity?

        • who? says:

          If Google “steals” your project lead, you should have been paying your project lead better. Or at least not laid off all of his buddies and sent their work to China.

    • coffee100 says:

      Because they would never ram a gigantic earthquake-causing piston-driven aluminum dick into the ass of America, right?

      Between this and “oh, but it’s okay if Megaupload’s servers are melted into slag because the government says they have all the evidence they need” I think the average I.Q. of the Internet has dropped a full point today.

  16. The Twilight Clone says:

    I refuse to believe that Steve Jobs (a.k.a. GOD) could possibly be involved in something so vicious and underhanded.

    Nuh-uh.

    Sent from my iPad

    • El_Red says:

      Considering how much he hated giving any money to charities; you should be looking for him in the Robot hell.

  17. Sensical says:

    Excuse me? I have a friend at Google who’s pretty much a customer service rep and he’s making 70k a year in total compensation right out of college. Don’t forget the free massages, food and bonuses for w/e excuse they come up with.

    • El_Red says:

      Google has the reputation for being the best. However, for example, if you already work for Apple, you can’t go to Google (and get paid more).

    • exconsumer says:

      And maybe he could be getting more. Employee wage fixing is wrong. The cost of employment is the cost of business. Supply and demand. Companies should not collude their way out of the consequences of the free market.

  18. markvii says:

    I’ve encountered this sort of informal salary-fixing here in MI.

    The companies here use a lot of IT people (almost all contractors), have standard billing rates, and will only use certain contract houses. Because of the billing rate standardization, it effectively standardizes salaries.

    Also, if you’re on assignment at most larger organizations, any contract house that works with that company (or hopes to later) won’t talk to you. They’re afraid they’ll get on the company’s s*** list for taking one of their contractors.

    Basically, you have to be unemployed before a recruiter will talk to you, but then the companies only want to talk to folks that are currently employed. Can you say Catch-22?

    Maybe that’s why they “can’t find qualified candidates” and use so many H1B’s.

  19. AEN says:

    Companies always use the argument: “We can’t find qualified candidates”, but they never finish the sentence… “willing to work for $25,000/year”.

  20. Dallas_shopper says:

    I’m sick of the second-rate H1-Bs thronging my office. Seriously. They have no sense of humor, refuse to OWN anything, do second-rate shitty work, and are general killjoys. They will also punt ANYTHING to ANYONE as long as they don’t have to do anything with it.

    Oh, and there’s a reason why a lot of them work more than 40 hours a week. It’s because it takes them 60 hours to do what I can do in 30.

    Obviously there are exceptions, but this is what I’ve observed in 14 years in I.T. so I do have some idea what I’m talking about. The H1-Bs are the types who will post desperate-sounding messages on industry forums with stupid questions like “How do I eliminate duplicates from this query? Please provide detailed examples.” Basically this translates as “Do my job for me for nothing, please.” I’ve seen it more times than I can count. It makes me sick.

    When I’m on call and there’s a massive job failure, 9 times out of 10 it’s for something that either an H1-B or outsourced resource produced. They’re responsible for maybe half of what’s out there but account for 90% of the problems. What does THAT tell you?