Apple, Google, Intel and Adobe recently agreed to a $400 million settlement to be distributed among more than 64,000 employees who worked at those companies between 2005 and 2009. During that time, each of these companies agreed not to make cold calls to the employees of other companies, as well as other recruiting restrictions. The U.S. Department of Justice (DOJ) found that these agreements literally took money out of the pockets of the affected employees by suppressing employment opportunities and compensation values.
A class action lawsuit was also filed against the companies, which initially demanded approximately $3 billion in lost compensation and treble damages. As a result of the DOJ action, the ensuing civil lawsuit and pending settlement, employers around the country are on notice that restrictive no-poaching practices will most likely violate federal and state anti-trust laws and may lead to harsh consequences that include awards to employees of the amounts they would have made if not for the collusion, not to mention potential treble damages.
Some of the most well-known and powerful companies in the world are learning the hard way that businesses cannot collude to restrict the free market for skilled employees. The trouble for these companies began back in 2010, when the DOJ’s Antitrust Division filed a complaint in U.S. District Court alleging anti-trust violations of the Sherman Act, saying that the companies had reached “facially anticompetitive agreements” that “eliminated a significant form of competition … to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities.” The DOJ found that the companies had in fact agreed not to cold call each others’ employees and had kept “do-not-call lists” to avoid such recruiting.
There is no doubt that these collusive agreements and practices harmed employees. One of the principal means by which many companies with skilled workers competitively recruit employees is to solicit them directly from other companies in the process referred to as cold calling, which is very effective at reaching the best and most satisfied employees regarding alternate career opportunities. Competition in the labor market results in better salaries, enhanced career opportunities and increased mobility for employees. On the flip side, collusive agreements not to solicit or hire certain employees reduce competition and lower salaries. In fact, these restrictive practices have much the same effect as price-fixing or agreements between companies not to compete for certain buyers, both of which are “per se” violations of the anti-trust laws.
After the DOJ investigation, the companies involved agreed to end their anticompetitive practices. However, the DOJ did not extract any compensation for the Apple, Google, Intel and Adobe employees, and so the civil lawsuit was filed to get them their just due. In the end, it appears that that lawsuit will cost the four companies hundreds of millions of dollars that will be distributed among the employees who were harmed by the aforementioned restrictive practices.
Unfortunately, this type of collusion that Apple, Google, et al, thought they could get away with is all too common and occurs in Texas as well as the Silicon Valley. And, if any companies in Texas engage in the same or similar practices in restraint of a free labor market, their employees would be equally harmed and equally entitled to compensation. For example, if large companies in the oil and gas industry agreed not to poach or solicit each other’s engineers and workers without a justifiable reason for doing so, then those workers may have a claim against the companies involved.
Kilgore & Kilgore is highly experienced in these matters and all aspects of employment law. If you have information that leads you to believe that your employment opportunities and compensation packages are being restricted due to collaboration among potential employers, or if you have any other questions regarding employment matters such as non-compete or non-solicitation agreements you may have signed, contact Kilgore & Kilgore today. Our Dallas employment attorneys are ready to evaluate your situation. Call us today at (214) 969-9099 or email dem@kilgorelaw.comto set up a free review of the facts of your case with a Dallas employment lawyer.