Adobe, Apple, Google, Intel, others sued for wage fixing

By on May 6, 2011, 7:00 AM

Siddharth Hariharan, a former software engineer at Lucasfilm, has filed a class action lawsuit in California Superior Court in Alameda County, charging that several leading technology companies in the US violated antitrust laws by conspiring to fix the pay of their employees and entering into No Solicitation agreements with each other. The complaint, drawn up by the law firm Lieff Cabraser Heimann & Bernstein (LCHB), seeks restitution for lost compensation and treble damages for the anti-competitive employment practices of Adobe Systems, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar.

"My colleagues at Lucasfilm and I applied our skills, knowledge, and creativity to make the company an industry leader," Hariharan said in a statement. "It's disappointing that, while we were working hard to make terrific products that resulted in enormous profits for Lucasfilm, senior executives of the company cut deals with other premiere high tech companies to eliminate competition and cap pay for skilled employees."

The complaint alleges that the conspiracy began in 2005 with Lucasfilm and Pixar, continuing until at least 2009 with all defendants, who conspired in at least three ways. The first was based on agreements not to actively recruit each other's employees. The second featured agreements to provide notification when making an offer to another's employee (without the knowledge or consent of that employee). The third outlined agreements to cap pay packages offered to prospective employees at the initial offer. The companies allegedly entered into No Solicitation agreements with knowledge of the overall conspiracy.

Joseph R. Saveri, the attorney from LCHB representing Hariharan explained that as additional companies joined, competition among participants for skilled labor decreased. This resulted in lower compensation for the defendants' employees than would have been possible in a properly functioning labor market where employers compete for workers.

"Competition in the labor market results in better salaries, enhanced career opportunities for employees, and better products for consumers," stated Mr. Saveri. "We estimate that because of reduced competition for their services, compensation for skilled employees at Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar was reduced by 10 to 15 percent. These companies owe their tremendous successes to the sacrifices and hard work of their employees, and must take responsibility for their misconduct."

This lawsuit follows an investigation last year by the US Department of Justice into similar misconduct by the defendants. After that investigation was made public, defendants agreed to end the anticompetitive agreements, and the civil lawsuit that followed was settled in September 2010. Because no compensation was provided to the defendants' employee, however, this class action was filed to seek for the lost pay.




User Comments: 5

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MilwaukeeMike said:

I saw the headline of 'Others sued' and wondered who the others were. It's the six listed in the 2nd last paragraph. Here is the justice department press release. [link]

It's one thing to screw over your customers, but it's rare to see a story about a group of firms purposefully keeping down their best employees salaries. Very cold.

Emil said:

I list them at the end of the first paragraph.

MilwaukeeMike said:

I read the press release... 'sued for wage fixing' is a bit misleading. They were sued for 'restraining competition'. What happened was Apple entered into an agreement with Google to promise not to cold call their employees if google promised not to cold call Apple's employees. Apple had this agreement with Pixar, and google had it with Intuit and so on....

So they weren't deciding what should be a max salary for a job, they were protecting their resources (employees) by trying to make sure they weren't recruited by their competitors.

While this makes sense for a company to protect their best employees, they should do it by offering them enough benefits and money so they don't want to leave. Not by stopping others from offering them jobs. This then allows the company to pay that employee less. The employee could still go apply somewhere else, but they wouldn't get a phone call with a huge offer.

Guest said:

MilwaukeeMike,

Actually the anti-poaching agreement they had was much worse.

So they weren't able to poach, but they also weren't able to outbid...

Example: You applied at Pixar while still working at Google. If Pixar wanted you, they'd have to inform Google that they were going to hire you, Google would then tell them you were making "50k/year" for example and Pixar would NOT be able to outbid that... Pretty sick stuff..

Also, most of the positions affected by this collusion were non-engineering positions. Just happens to be an engineer suing, but wasn't true... I'm an artist and it affected me. I work for Pixar.

Archean Archean, TechSpot Paladin, said:

It happens in many other industries, and companies do make 'understandings' not to call each others employees / or offer them a job. Second issue which I've noticed, that 'wage fixing' is very prevalent across the industries as well. I think problem lies in the way the laws are made, which are not good enough to protect employees interests and the monitoring mechanism. It is just one aspect of the much larger problem, the way the government is elected/run (read politicians as they are the ones who eventually do this).

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