Feds, tech companies reach agreement to halt anticompetitive hiring practices

The Department of Justice and six tech companies have reached an agreement that will keep tech companies from crafting no-solicitation deals.
Written by Sam Diaz, Inactive

The U.S. Department of Justice and six technology companies have reached a settlement that will allow the companies to poach each other's employees, squashing no-solicitation agreements they have been in place for years. (Statement, Techmeme)

Those agreements, largely architected and managed by senior executives and dating back to 2005, kept recruiters from "cold calling" employees of each other's companies about other employment opportunities. Regulators said these agreements between the companies - Adobe, Apple, Google, Intel, Intuit and Pixar - amounted to anti-competitive practices. The agency said, in a statement:

...the agreements eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.

It also noted that the deals "interfered" with the "price-setting mechanisms that otherwise would have prevailed in competition for employees." In other words, by blocking bidding wars with the competition, the company were essentially keeping salaries from being inflated by employees threatening to leave for more money.

Adding to that, the agreements reportedly were not limited by geography, job function, product group of time period. The DOJ said the agreements were "broader than reasonably necessary for any collaboration between the companies."

Specifically, the DOJ highlighted agreements between:

  • Apple and Adobe
  • Apple and Pixar
  • Apple and Google
  • Google and Intel
  • Google and Intuit

The settlement, which still needs court approval, will be in effect for five years and would go beyond cold calling to more broadly prohibit any sort of recruitment.

The DOJ also noted the complaint and settlement stemmed from a larger investigation about employment practices among high tech firms, which have a stronger demand for workers with advanced or specialized skills. The agency is continuing to investigate other no-solicitation agreements, it said.

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