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Google and others reach deal with Justice Department over hiring

Under the proposed settlement, six major Silicon Valley firms — Google, Apple, Intel, Adobe, Intuit and Pixar — would be barred from pledging not to 'cold call' one another's employees.

September 25, 2010|Jessica Guynn, Los Angeles Times

Reporting from San Francisco — The Justice Department has reached an agreement with six major Silicon Valley companies to settle charges they colluded to keep a lid on wages by agreeing not to poach employees from one another.

The proposed settlement, filed in the U.S. District Court for the District of Columbia, bars Google Inc., Apple Inc., Intel Corp., Adobe Systems Inc., Intuit Inc. and Walt Disney Co.'s Pixar Animation Studios from pledging not to "cold call" one another's employees as part of partnership agreements.

Federal officials have been scrutinizing such agreements for more than a year, concerned that they restrained competition for skilled workers and kept an artificial cap on wages by avoiding expensive bidding wars.

For example, Apple placed Google on its "do not call" list, which instructed employees not to directly cold-call Google's employees. Similarly, Google listed Apple among the companies with which it had special agreements not to solicit, the Justice Department said. These agreements were "actively managed" by senior executives, it added.

If approved by the court, the settlement will ban the companies from entering into any such agreements for five years. The companies did not admit any legal wrongdoing.

In a blog post, Google associate general counsel Amy Lambert said: "While there's no evidence that our policy hindered hiring or affected wages, we abandoned our 'no cold calling' policy in late 2009 once the Justice Department raised concerns, and are happy to continue with this approach as part of this settlement."

Laura Fennell, Intuit's senior vice president and general counsel, said that the software developer was "in agreement with the DOJ in our shared desire to maintain an open, fair, competitive market for talent."

Silicon Valley has one of the most competitive job markets in the country, with sought-after engineers and other employees with special skills often jumping to the next big opportunity.

If the court fight had proceeded, it could have helped decide the legality of such accords, not just in the high-tech sector but across all industries.

But the fight had risks for each side. To win, the Justice Department would have had to convince a court that workers had suffered significant harm. A loss for the companies would have opened the door to a rush of lawsuits.

Companies argued that they gave one another such assurances to improve collaboration on key projects. Further, some companies said that although they had agreements not to cold-call partners' employees, they never agreed not to hire one another's employees. Google said it had hired hundreds of employees from companies with which it collaborated, through job fairs, employee referrals and other means.

jessica.guynn@latimes.com

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