Google, Apple, Intel and Adobe will pay a total of $324 million to settle a class-action lawsuit that alleged that the companies were illegally conspiring to control salaries by not recruiting employees who worked for rival companies.
The settlement was reported April 24 in a story by Reuters, which added that the payment agreement comes just weeks before a very high-profile trial would have begun. The original lawsuit, which was filed on behalf of some 64,000 workers in 2011, accused the companies of "conspiring to hold down salaries in Silicon Valley, sources familiar with the deal said," according to the story. The lawsuit alleged that the four companies "conspired to refrain from soliciting one another's employees in order to avert a salary war."
The lawsuit sought $3 billion in damages for the plaintiffs, which "could have tripled to $9 billion under antitrust law," according to Reuters. "The case has been closely watched due to the potentially high damages award and the opportunity to peek into the world of Silicon Valley's elite. The case was based largely on emails in which Apple's late co-founder Steve Jobs, former Google CEO Eric Schmidt and some of their Silicon Valley rivals hatched plans to avoid poaching each other's prized engineers."
The companies allegedly discussed matters about potential employee hiring in emails back and forth, the story reported. "In one email exchange after a Google recruiter solicited an Apple employee, [Google's] Schmidt told Jobs that the recruiter would be fired, court documents show," Reuters reported. "Jobs then forwarded Schmidt's note to a top Apple human resources executive with a smiley face."
Schmidt, in another email exchange with Google's human resources director, advised discretion when the director asked Schmidt about "sharing its no-cold call agreements with competitors," the story reported. "Schmidt responded that he preferred it be shared 'verbally, since I don't want to create a paper trail over which we can be sued later,'" he wrote back, according to a court filing described by the story.
As the case continued, the companies "acknowledged entering into some no-hire agreements but disputed the allegation that they had conspired to drive down wages," the Reuters story reported. "Moreover, they argued that the employees should not be allowed to sue as a group."
The legal issues behind the case were not new.
Back in April 2010, the U.S. Department of Justice began investigating the hiring practices of Google, Apple and other companies, according to an earlier eWEEK report. The hiring practices at that time allegedly included agreements to not poach each other's top talent, which could violate antitrust and labor laws. The federal government had previously investigated Google, Apple and other companies over similar deals.
The recent class-action lawsuit targeted the companies in civil court following the government investigation.
Google did not respond to a request for comment by eWEEK.
Google, Apple and other companies also found themselves in the headlines in January 2014, not for their products but for their involvement in a dispute in the San Francisco Bay Area involving corporate buses the companies use to shuttle their employees back and forth to their jobs. The dispute arose because the companies had not contributed money to the city for the upkeep of the bus stops that were used by the corporate vehicles. The use of the stops without compensation inspired protests by local activists who opposed the practice. In January, an agreement was reached between the city and the companies to establish fees for the use of the bus stops.
In December 2013, a Google commuter bus that whisked employees to and from their San Francisco neighborhoods to their workplace some 34 miles away in Mountain View, Calif., was blocked from proceeding by a group of protestors who oppose the Google buses for traffic and economic reasons, according to an earlier eWEEK report.
Google was also embroiled in controversy in late October 2013 when reports swarmed about the then-mysterious presence of a Google barge in San Francisco Bay and another in Portland Harbor in Maine. In early November 2013, Google finally issued a brief and vague description of what was going on by saying that the barges are being built as interactive spaces where people can learn about technology and where Google can show off devices such as Google Glass.