Dozens of U.S. technology
companies had explicit agreements not to headhunt each other’s employees, in an effort to hold down salaries, according to an on-going court case.
The tech companies have a reputation for going to long lengths to keep employees engaged and satisfied. From free lunches to finding jobs for spouses, Google and other Silicon Valley giants have all the perks to attract and retain the best. However, new evidence shows the lengths some companies were prepared to go to slow down the increase in staff salaries.
Headhunting employees from competitors is a business standard, but it does usually require offering an increased salary. Newly revealed emails from Google chairman Eric Schmidt and founder Sergey Brin, published on technology
blog PandoDaily, allege that the company had illegal agreements with a range of competitors to avoid hiring or recruiting from within each other’s ranks.
A 2005 memo from Apple’s then VP of Huam Resources reads:
Please add Google to your “hands-off” list. We recently agreed not to recruit from one another so if you hear of any recruiting they are doing against us, please be sure to let me know.
Please also be sure to honor our side of the deal.
An internal Google memo from the same year lists “sensitive” and “restricted” companies, that should not be cold-called. The list includes Intel, Genentech, Apple, PayPal and Comcast.
The cooperation is illegal under U.S. anti-trust and competition laws, and has resulted in a class action suit.
The agreement seems to have started as a deal between Apple’s Steve Jobs and the Google executives, but expanded beyond Silicon Valley to include Pixar, Intuit and LucasFilm.
Court documents indicate that Adobe joined the agreement out of fear that Apple would poach its employees in retaliation if it didn’t, and show that Google launched an internal investigation when Intuit reported its employees had been called by the search engine’s recruiters.
The Department of Justice chose to pursue a civil case, not a criminal case, which some commentators see as taking a “lenient” stance against this kind of agreement.