HR, IT Weigh in on Google, Apple $415 Million Settlement in Antitrust Suit

By Aliah D. Wright Jan 15, 2015
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HR professionals, legal experts and others are weighing in on a reported $415 million antitrust settlement in which Apple, Google and other tech giants agreed to pay 65,000 highly-skilled technology workers for colluding to restrict workers’ wages and prohibit them from getting better job offer​s.

Some responded the settlement was too low, amounting to less than $6,000 per person—once some $81 million in legal fees are meted out. Others called the settlement “typical.”

Filed in the U.S. District Court for Northern California, the initial complaint resulted from a 2010 U.S. Department of Justice civil antitrust suit and settlement that required Google, Apple, Pixar and Intel Corp. to cease “anticompetitive” pacts. In those pacts, the companies agreed not to directly recruit each other’s high-skilled technology employees. A related settlement with Lucasfilm Ltd. occurred in 2010.

Terms of the settlement were not revealed in a letter filed in an appellate court in San Francisco on Jan 13, 2015. Sources close to the class-action antitrust suit, in which tech workers accused the high-tech companies of conspiracy, told The New York Times that they agreed to settle the case for $415 million.

As the Society for Human Resource Management (SHRM) reported last year, high-ranking officials at Google Inc., Apple Inc., Adobe Systems Inc. and other Silicon Valley technology companies led by late Apple founder Steve Jobs were accused of colluding during the mid- to late 2000s to suppress and fix employee wages, “entering into ‘an interconnected web’ of two-way agreements to eliminate labor competition among the companies.”

In August 2014, U.S. District Judge Lucy Koh rejected as too small a $324.5 million settlement that would have forced Apple, Intel, Google and Adobe to pay to settle the case. Koh stated there was “ample evidence of an overarching conspiracy.” She wrote that Apple’s Jobs, Google CEO Eric Schmidt and other high-ranking executives detailed their conspiracy plans in multiple e-mail exchanges.

In rejecting the settlement, Koh also said the case warranted a payment of at least $55 million more than $324 million. At least one expert said the wages calculated to have been loss were estimated between $3 and $9 billion.

A release from the Justice Department stated that the companies “entered into agreements that restrained competition between them for highly skilled employees. The agreements between Apple and Google, Apple and Adobe, Apple and Pixar and Google and Intel prevented the companies from directly soliciting each other’s employees.”

The Justice Department stated the pacts “disrupted the normal price-setting mechanisms that apply in the labor setting.” Although the companies are settling, they’ve admitted no wrongdoing. Google, Apple, Pixar and Intel have not yet spoken to the media about the settlement. Reached by phone by SHRM Online onJan. 15, Adobe did not respond to a request for comment.

In a telephone interview with SHRM Online on Jan. 15, 2015, Orly Lobel, a labor and employment law professor at the University of San Diego who has followed the case from its inception, said she believes the judge will accept the settlement.

Calling it a “unique and novel case in the context of recruitment and hiring practices,” Lobel considers this “a significant win” for the plaintiffs.

“It’s a very important, high-profile settlement that will signal [to companies] that these practices are illegal,” she said.

While the amount is “rather low compared to the potential damages calculated and … the practices were so widespread and sustained over several years … the settlement is typical in class action suits. The win is more the symbolic message, and the compensation is indeed lower than the damages that were incurred by the plaintiffs.”.

It’s a lesson employers in California should take particular note of, said Eileen Fitzgerald Addison, an attorney in the Newark, N.J. office of Genova Burns.

“While this settlement serves as a reminder to employers that they may not collude to restrict employees' mobility, this case is unique because Apple and Google are headquartered in California, one of the few states that prohibit non-compete agreements,” Addison said. “Clearly Apple and Google were trying to work around this prohibition. Employers that operate in those states that allow non-compete agreements may still protect their proprietary interests by having employees sign non-compete agreements, either as a condition of employment, or upon separation.”

Meanwhile, going forward, Lobel predicts cases of this nature “will be taken seriously by … federal anti-trust investigators, and they lend themselves potentially to civil litigation. It’s not something that recruiters can agree amongst themselves—to not call competitors’ employees,” she said.

The message is that the market for labor is just like the market for goods and services, Lobel added. “You cannot collude … in order to try to keep your best talent.”

Rather, companies should create incentives to keep employees content such as bonuses or performance-based pay, experts said.

Companies should focus on making their “offering and environment so positive that employees want to stay, rather than expending effort trying to keep others from recruiting them,” said d focus on making their “offering and environment so positive that employees want to stay, rather than expending effort trying to keep others from recruiting them,” said d focus on making their “offering and environment so positive that employees want to stay, rather than expending effort trying to keep others from recruiting them,” said Jason Berkowitz, vice president of client services for Seven Step RPO (Recruitment Process Outsourcing). “The reality is that if you build a reputation for having strong talent, those individuals are going to get recruited by other firms, and nothing that you do can stop that. The trick is to work hard to get employees to want to stay.”

Lobel, author of Talent Wants to Be Free (Yale University Press, 2013), said “everybody wins from the flow of talent. When people are moving in competitive markets and there’s fresh blood that comes into competitive markets,” it’s a win-win for employers.

At the end of the day, she said, “when recruiters have much fewer pools [from which to recruit] it’s just a bad thing for everybody—not just the employees.”

Aliah D. Wright is an online editor/manager for SHRM Online.

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