Earlier this year, it was reported that seven of the biggest and most powerful electronic companies had allegedly formed an antitrust conspiracy to supress the compensation of their employees by entering into “no poach” agreements.
The Department of Justice recently released information which suggests that Apple and Google along with Intuit, Adobe, Pixar, Intel and Lucasfilm, may have been involved in implementing secret “no poaching” agreements.
TechCrunch published the Department of Justice’s early findings and reported that the companies had been told to ‘deny offers to anyone who applied for a job voluntarily from competing firms, and were to alert the employee’s current boss.’
The results of the Department of Justice’s investigation were revealed during a class-action lawsuit hearing in California where U.S. District Judge Lucy H. Koh said that she would give the claimants a chance to amend their complaint and re-file it, and told lawyers during the hearing, as Bloomberg reported, “They still have an antitrust claim that’s going forward so I don’t want to see any obstruction on discovery.”
Court Demands to See Agreements
Judge Koh’s decision means that each of the companies involved in allegedly violating poaching laws and implementing secret no-poaching agreements, will be required to provide details of the agreements regarding the hiring of employees they made with other companies.
Delighted by the judge’s decision, Joseph Saveri, a lawyer for one of the plaintiffs, said we will now “Get to see what really happened”, and claims that damages could amount to hundreds of millions of dollars. (1)
In a statement to Bloomberg, Google said it has “always actively and aggressively recruited top talent.”
The tale took an even more interesting twist when reports emerged last week that Google has hired an Apple senior director of product integrity for a special ‘top secret’ project.
Google has never employed such an employee of such senior rank from Apple before, but what is particularly interesting is the timing of the new posting, right when Google and Apple are in the throes of a lawsuit for allegedly executing a “no poach” agreement.
The former Apple employee who has been ‘poached’ by Google is Simon Prakash, who, according to his LinkedIn page, worked as the senior director of product integrity at Apple for more than eight years. During this time, Prakash was responsible for ensuring product quality of all Apple products.
J.D. Power – collectors and analysers of consumer satisfaction data – revealed that Apple has the best reputation for product quality in the world, making Simon Prakash became a highly desirable and sought-after director of quality control.
Google’s New Top Secret Project
A report on VentureBeat states that Prakash will now be working for Google on a ‘top secret’ project. Although Google has made no indication of what the ‘secret project’ is, speculation is emerging on the Internet that the former Apple senior director of product control will be working alongside Google co-founder Sergey Brin, who is the director of numerous secret research and development projects at Google.
It stands to reason that every company has information that it considers both invaluable and integral to its success. A former employee who therefore has knowledge of a company’s internal strategies, technology, research and developing products would be an attractive asset to a competitor seeking to encroach upon its rivals’ markets.
Presumably, this was the basis behind the seven of the world’s most powerful tech companies collective ‘no-poach’ agreement, to supress the compensation of their employees unique knowledge and skills.
In the UK, there is a law known as ‘restrictive covenants’, which is basically a clause in an employee’s contract which, according to out-law.com, “prohibits the ex-employee from soliciting or dealing with customers of the business by using knowledge of those customers gained during his employment.”
Employee poaching has traditionally been rife in the IT industry due to high demand for technical skills. After an investigation into non-competitive hiring practices, a settlement was reached between the U.S. Department of Justice and the major tech companies where those companies agreed they would no longer forge non-poaching agreements with competitors.
The claims that they have been breaking this agreement would therefore be highly damaging for the likes of Google, Apple and Intel.
The attempt by Google to hire a former Apple employee – when the company faces an investigation for its part in the “no poaching” agreement between the Silicon Valley ‘big boys’, could not be better timed.