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article imageTech giants conspired to fix wages, employees claim

By Kelly Fetty     Feb 12, 2014 in Technology
San Jose - Tech giants Apple, Google, Intel and Adobe will face a class action lawsuit brought by over 64,000 employees who claim Steve Jobs and other executives conspired to hold down wages and stifle career advancement.
A ruling by the 9th U.S. Circuit Court of Appeals on January 14 cleared the way for the suit to proceed, the San Jose Mercury News reports. The trial is scheduled for May 2014.
Damages could total $9 billion.
"Gentlemen's Agreements"
The employees, whose job titles range from software developers to programmers and digital artists, claim that a cadre of executives, led by Steve Jobs and Google boss Eric Schmidt, agreed to keep wages "artificially low" by "eliminating the competition for skilled labor."
Pixar President Edward Catmull said a free market for top employees "messes up the pay structure," according to court documents.
The plaintiffs charge the conspiracy began in 2006 when Jobs, then CEO of Pixar, approached Lucasfilm. The two companies agreed not to recruit each others' employees, to report if an employee of one company applied for a job with the other and to refuse to create "bidding wars" if an employee was offered a higher salary by the other company.
Pixar put the terms of the agreement in writing and sent them to Lucasfilm. Both companies gave copies of the agreement to their recruiters.
Employees of Pixar and Lucasfilm were never told about the agreement.
According to court documents, between 2005 and 2009 Jobs came to identical agreements with Adobe and Google. After Jobs sold Pixar to Disney in 2006, Apple and Pixar reached a similar agreement.
In 2007, Jobs approached Edward T. Colligan, then CEO of Palm Inc.
Colligan refused.
“Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” Colligan told Jobs.
Plaintiffs' attorneys charge the agreements violated the Sherman Act, the Cartwright Act, and the California Business and Professions Code.
No Cold Calling
"Cold calling" lies at the heart of the alleged conspiracy, say the plaintiffs.
In cold calling, recruiters from one company will contact the employee of another company and try to lure them away with a better package of pay and benefits. Cold calling is popular because tech companies perceive currently employed workers as more qualified and harder-working than job applicants.
Companies allegedly involved in the conspiracy created "Do Not Call" lists of each other's employees. Employees on the Do Not Call list don't realize the value of their skill set on the open market and are denied opportunities to improve their earnings, the plaintiffs contend.
Tech Giants Not Losing Any Sleep
David Balto is an antitrust attorney who helped the Federal Trade Commission investigate Microsoft in the 1990's. Lawsuits that hinge on hiring practices are difficult to win, he told Yahoo News.
"I don't think anybody at these companies is losing a nanosecond of sleep because of this lawsuit," he said.
SFGate reports the Justice Department (DOJ) sued the same companies in 2011. The DOJ won a settlement requiring the defendants not to engage in similar practices in the future, although no defendant admitted wrongdoing.
The DOJ settlement did not include damages, which opened the door for the current class action suit.
"We look forward to seeking justice for the class at trial," Kelly Dermody, counsel for the plaintiffs, told San Jose Mercury News.
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