Six top tech companies’ settlement ends employee-poaching ban

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In a settlement with the U.S. Department of Justice, six top U.S. technology companies—Google, Apple, Adobe, Intel, Intuit, and Pixar—have agreed to end agreements with each other under which they would not try to recruit each others’ top employees. The Justice Department’s concerns were that the no-solicitation agreements between the companies significantly reduced competition to recruit highly skilled employees—which, in turn, meant those employees were deprived of job opportunities.

“The agreements challenged here restrained competition for affected employees without any pro-competitive justification and distorted the competitive process,” said Deputy Assistant Attorney General for the DOJ’s Antitrust division Molly S. Boast, in a statement. “The proposed settlement resolves the department’s antitrust concerns with regard to these no solicitation agreements.”

If accepted by the court, the proposed settlement would prohibit the companies from engaging in anticompetitive no-solicitation agreements: this means that companies would be free to cold-call another company’s employees in hopes of luring them away, and also more broadly bars other anti-solicitation practices. The companies would also have to agree to implement compliance and monitoring measures. The settlement would be in effect for five years.

The settlement targets a number of explicit agreements between companies not to cold-call each other’s employees: Apple and Adobe entered into such an agreement in 2005, Apple and Google did something similar in 2006, and Apple and Pixar did something similar in 2007—this was after to Disney’s 2006 acquisition of Pixar. Google and Intuit agreed that Google would not cold-call Intuit employees by mid-2007, and by September 2007 Google and Intel agreed not to cold-call each others’ employees.

The agreements did not impact employees initiating contact with competitors about job opportunities; rather they only impacted companies’ abilities to directly contact employees of competitors in hopes of wooing them away. The arrangements between the companies weren’t simple handshakes and gentlemen’s agreements: the complaint alleges that the agreements were formed and “actively managed” by senior executives at the companies involved.