In an attempt to stave off multi-million dollar bidding wars, several high-tech companies entered into agreements that the Department of Justice now says violated anti-trust laws.
In environments that require only the best talent, it's not hard to imagine how top tech companies could indulge in some serious bidding wars. TechCrunch recently reported that two Google employees, Sundar Pichai and Neal Mohan, were each offered millions of dollars in stock options and other compensation to keep them from defecting to Twitter.
Knowing how out of control this kind of situation could become, some of those same high-tech companies entered into agreements with one another where they would agree not to poach or cold call each others' employees.
In 2010, the US Department of Justice (DOJ) investigated these companies and concluded that they were violating antitrust laws with these agreements. The DOJ reached a settlement with six high technology companies—Adobe Systems Inc., Apple Inc., Google Inc., Lucas Film, Intel Corp., Intuit Inc. and Pixar—that would prevent them from entering into "no solicitation" agreements for employees.
This settlement did not include any compensation for those employees that had been adversely affected by the agreements, but that's about to change. There is now a class action lawsuit filed with Siddharth Hariharan, an engineer for Lucas Film between 2007 and 2008, as the named plaintiff. According to the complaint:
[Defendants] entered into at least three agreements to eliminate competition between them for skilled labor. First, each agreed no to cold call each others’ employees. Second, each agreed to notify the other company when making an offer to an employee of the other company, if that employee applied for a job notwithstanding the absence of cold calling. Third, each agreed that if either made an offer to such an employee of the other company neither company would counter offer above the initial offer. This third agreement was created with the intent and effect of eliminating “bidding wars.”
It will be interesting to see how this one plays out. It looks like it could be a long, hard road for defendants to prove and perhaps even harder for compensation to be determined.