Saturday, January 25, 2014

Innovation is key, but the Old Rules work fine too

Major players in Silicon Valley may have colluded to keep down employees' wages by entering secret non-recruitment pacts with each other, according to a class action lawsuit filed by the Department of Justice and reported by PandoDaily.

Emails uncovered by the DOJ show that top executives at Apple, Google and others entered allegedly illegal agreements to stifle wage growth and save their companies' margins. The suit claims that the arrangements succeeded in artificially lowering wages and have in effect stolen an estimated $9 billion from over 100,000 tech employees. The class-action lawsuit got final approval from the 9th Circuit Court of Appeals last week, despite attempts by Apple, Google, Intel and Adobe to have it thrown out.

Tech blog PandoDaily goes into great depth about the suit.

Late Apple founder Steve Jobs was not subtle in threats to competing companies that they should not poach Apple talent. After pressing Google executive Eric Schmidt to agree to keep his company's hands off Apple employees, he went after Adobe for trying to recruit a low-level worker. Adobe CEO Bruce Chizen replied in an email exchange that first appeared on Pando:
I thought we agreed not to recruit any senior level employees.... I would propose we keep it that way. Open to discuss. It would be good to agree.

To which Jobs responded:
OK, I'll tell our recruiters they are free to approach any Adobe employee who is not a Sr. Director or VP. Am I understanding your position correctly?

Chizen promptly yielded:
I'd rather agree NOT to actively solicit any employee from either company ..... If you are in agreement, I will let my folks know.

At least one tech magnate seemed to know this was illegal. In 2005, Schmidt instructed a Google business executive to keep the agreement secret and only discuss it "verbally, since I don't want to create a paper trail over which we can be sued later," reported Pando.

The wage-theft ring goes as far back as 1986. The lawsuit also implicates Lucasfilm and Pixar (eventually sold to Apple), citing a philosophy adopted by "Star Wars" creator George Lucas.


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