A group of high-powered tech companies has been slapped with a class action suit for conspiring to artificially keep employee wages low. The companies being sued are Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar. Sound familiar? It should. These companies, with the exception of Lucasfilm, were investigated by the Department of Justice for the same reason, and in September each avoided litigation with the DOJ by agreeing to change their ways on the matter.
Although the agreement with the U.S. government did not include an admission of guilt, that doesn't save the companies from fending off what could be an extremely expensive civil suit. In case you haven't heard the story yet, we'll recap: Back in the days when Apple and Google were friends (before Android and Chrome OS), when Google's then CEO Eric Schmidt sat on Apple's board of directors, Apple and Google allegedly came up with what they thought would be a very good idea. They would not hire away each other's employees -- and they wouldn't mention this to their employees who thought they were building careers, not signing on for a form of indentured servitude. Soon, that agreement was expanded to include all the companies named in the suit, except one ... Lucasfilm. Lucasfilm is a new name in the mess, and is accused of having a similar agreement with Pixar in this lawsuit.
Attorneys for the new class action suit, being brought by a former software engineer at Lucasfilm and founder and CEO of InEarth, Siddharth Hariharan, makes these claims, according to a press release by the plaintiff's law firm, Lieff Cabraser Heimann & Bernstein:
"The complaint alleges the conspiracy among defendants consisted of (1) agreements not to actively recruit each other's employees; (2) agreements to provide notification when making an offer to another's employee (without the knowledge or consent of that employee); and (3) agreements to cap pay packages offered to prospective employees at the initial offer.
"Starting in 2005 with Lucasfilm and Pixar, and continuing until at least 2009 with all defendants, the companies entered into 'No Solicitation' agreements with knowledge of the overall conspiracy and with the intent to reduce employee compensation. As additional companies joined the conspiracy, competition among participating companies for skilled labor decreased. Compensation of defendants' employees was less than what would have prevailed in a properly functioning labor market where employers compete for workers."
The press release quotes the attorney, Joseph Saveri, as saying: "We estimate that because of reduced competition for their services, compensation for skilled employees at Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar was reduced by 10 to 15 percent."
Side note: Saveri earned fame as an anti-trust lawyer by crafting the settlement and injunction against De Beers for monopolizing the rough diamond trade. (Remember the 2006 movie Blood Diamond starring Leonardo DiCaprio?)
Although the attorney doesn't mention the total dollar amount the suit is seeking, you can bet we're talking about a LOT of money. The lawyers have put out the all-call to former and current employees at these companies. The information page says:
"The complaint for damages follows an investigation last year by the U.S. Department of Justice into similar misconduct by defendants. After that investigation was made public, defendants agreed to end the anticompetitive agreements. However, no compensation was provided to employees of defendants. Today's class action was filed to seek lost pay for the employees who were targeted by defendants' conspiracy."
One nitpick we have to point out -- of all the employers in the world, would you peg Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar as being chock full of low-paid/underpaid positions? Does your heart bleed for the folks that work for these companies?
Just for fun, we looked up a couple of these companies on Glassdoor.com. Some of Adobe's average salaries include $80,000 (software/quality engineers) and $142,000 (senior computer scientist). Some of Apple's average salaries are $98,000 (software engineer) and $122,000 (senior software engineer). And Google ... well come on, Google has a worldwide reputation for its work environment. In December, it reportedly gave all employees a $1,000 bonus and a 10% raise. Come to think of it, it did that a mere three months after squeaking out of DOJ litigation by signing the aforementioned agreement. Hmm.