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Why Apple, Google, Intel, and Adobe have to pay former employees $415M

(Business News) Apple, Google, and others are having to cough up huge wads of cash for something many in the Valley accepted as common knowledge for years.

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Trouble in the Valley

Four Silicon Valley Companies, including tech giants Apple and Google, are offering $415 million to settle a class action lawsuit brought to court by their current and former employees. The suit, filed in 2011, accuses the companies of conspiring to keep wages low by agreeing not to hire one another’s employees, all in violation of antitrust laws. The other defendants still on trial are Intel and Adobe.

Recruiting from a competitor company’s employees is known as poaching, and despite the misleading name, is not only legal, but also an important way that highly skilled employees can compete with one another to keep overall wages high.

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The motion for settlement was filed on Thursday in the US District Court in San Jose, California. Last August, US District Court Judge Lucy Koh rejected a settlement offer of $324.5 million, saying the figure was too low.

Three other companies in the suit, Lucasfilm, Pixar, and Intuit, already settled in 2013, paying a combined $20 million, which covered 8% of the plaintiffs in the case. According to Koh, $324.5 million isn’t enough money to fairly compensate the remaining employees.

Enter the class action suit

The case began in 2011 with a former Lucasfilm employee, and quickly several other Silicon Valley workers joined the case, forming a class action lawsuit. Their aim is to expose the extent to which Silicon Valley executives collaborate to keep wages low for everyone else.

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The four remaining companies deny that they have violated the law, but, according to Intel’s representation Chuck Mulloy, want to settle the suit to “avoid risk, burdens, and uncertainty of ongoing litigation.”

The evidence for the case revolves largely around several email exchanges between executives at the Silicon Valley companies. For example, Apple CEO Steve Jobs emailed Eric Schmidt, who was then CEO of Google, asking him not to try to hire one of Apple’s engineers. Schmidt forwarded the message to the hiring department, stating, “I believe we have a policy of no recruiting from Apple.”

At this time, the motion for settlement is waiting for court approval.

#ValleyTrouble

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Ellen Vessels, a Staff Writer at The American Genius, is respected for their wide range of work, with a focus on generational marketing and business trends. Ellen is also a performance artist when not writing, and has a passion for sustainability, social justice, and the arts.

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