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Feds Nix High-Tech Non-Solicitation Agreements

Posted  October 1, 2010

Employees at six high-tech companies can be expecting more cold calls with job offers, thanks to a settlement engineered by the U.S. Department of Justice (“DOJ”).

DOJ’s Antitrust Division has reached a settlement agreement with Apple, Google, Intel, Adobe, Intuit, and Disney’s Pixar unit, which will enable those companies to compete more vigorously for each other’s employees.  According to the DOJ, the settlement “prevents them from entering into no solicitation agreements for employees.”  In other words, no more agreements to refrain from cold-calling competitors’ workers.

DOJ has filed an antitrust complaint in U.S. District Court for the District of Columbia, along with the proposed settlement, which, if approved by the court, would resolve the lawsuit.

The complaint alleges that the six companies entered into agreements that restrained competition between them for highly skilled employees.   The agreements between Apple and Google, Apple and Adobe, Apple and Pixar and Google and Intel prevented the companies from directly soliciting each other’s employees.   An agreement between Google and Intuit prevented Google from directly soliciting Intuit employees.

The oldest of the agreements dates back to 2006.  If approved by the court, the agreement will govern the companies’ activities for five years.

Reports that a settlement between Justice and tech companies might be in the works began to surface last week.  And reports that the employment practices might have violated antitrust law began circulating last year. The now defunct policies allegedly violated antitrust laws by restraining competition among workers in high-tech fields, limiting their ability to move up in their careers, and ultimately slowing the pace of innovation and efficiency in technology markets.

Incentives exist for technology companies to try to hang onto their workers, given that companies often collaborate with each other on technology projects, which gives workers plenty of opportunities to get to know potential new bosses.  Even so, DOJ has indicated that it has no plans to file similar suits against such companies as Yahoo, Microsoft, IBM, and Genentech.

Tagged in: Antitrust Enforcement,