Seagate Lawsuit Highlights Bad Timing on Hiring

Companies killing product lines or changing courses midstream that lay off employees may have something to think about--especially in the state of Minnesota.

Check out the case of Chandramouli Vaidyanathan vs. Seagate.

Hard drive and storage company Seagate got smacked in a wrongful hiring suit ruling this month. Wrongful hiring? Yeh, it's evidently a real thing in the land of 10,000 lakes. A judge ordered the company to pay nearly $2 million to a former employee who was laid off in 2009 who sued after contending his job never really existed.

Chandramouli Vaidyanathan, according to news sources, was brought on to be the principal yield engineer for a solid-state disk product in development, but was laid off nine months later after the company was struggling to find a partner and the manufacturing never happened.

Vaidyanathan said he was told by hiring managers in his job interview that the company was close to having a functional chip for the product, but that was not the case when he arrived and they gave him a different job in technology integration. Vaidyanathan--after moving his family from Texas where he had been a manager at Texas Instruments--figured the company was three years from needing the role he was hired for, but was in no position to quit or change jobs. He'd have to give back his bonus and uproot his family again, and he generally wanted to succeed in his new company, according to what he told Financial Tech Spotlight in an October article.

Then, the recession hit and things went downhill for a lot of people at Seagate in Minnesota and in California.

Under Minnesota law, a company cannot induce an employee to move to the state by knowingly means of false representations, according to what Vaidyanathan's attorney Brent Snyder told Financial Tech Spotlight.

The basis for the case is a Minnesota law that dates back to 1913, which is seldom used as a cause of action. The law makes it illegal for an employer to induce a person to move from one place in the state to another, or from another state, territory or country for a job in Minnesota "by means of knowingly false representations." ... A key in convincing a jury of Seagate's liability will be proving that people within the company "knowingly" made false representations, a subjective term of law.

Snyder convinced a jury, and Vaidyanathan was awarded $1.9 million.

Why so much? Well, you have to consider total compensation, benefits lost, stock options, attorney fees and damages. Vaidyanathan lost several years of skills, and when you are out of the game in the chip manufacturing business for a while, it can very much be career ending.

Also, Vaidyanathan is 47 years old. Can't forget about the ageism (not that it was central to the case, but that it exists) especially when juries are involved.

In any event, it's an odd case where a company got the talent it wanted before it was anywhere close to being ready to use it. Aggressive recruiting and poaching from competition can work, but it's also a matter of whether they really needed this talent at the time they hired. Someone at Seagate, it appears, did not due its diligence on whether it needed a yield engineer when they said they did.

In fairness, Seagate hasn't said much of anything publicly, and you can't really blame them. Many people were let go in the industry and the economy forced that to happen. This time it really cost them.

As for Vaidyanathan, he started his own solar and wind energy business, where he sets up and installs systems for consumers and businesses, but he is earning much less than he did when he has a yield engineer.

The $2 million should help a bit.