Google and Apple amongst companies to pay £324 million in court settlement after being accused of keeping down wages
Friday 25 April 2014
Four of the world’s largest tech companies have agreed a multimillion out-of-court settlement with a group of employees that claimed they had organised an employment agreement that would control worker movement and keep the salaries of Silicon Valley’s workers down.
Apple, Google, Intel and Adobe agreed to pay out £324m to the group and avoid lawsuit proceedings that were due to begin next month.
The class action case was brought against the tech giants on behalf of almost 64,000 workers in 2011, after they alleged that all four companies had conspired to organise employment arrangements that would prevent companies from poaching each other’s workers.
It was felt that by taking part in the arrangement companies were restricting the ability for workers to move between companies and as a result reduce the employer competition.
It was argued that by limiting this competition, the four named tech companies could control wages and, as a consequence, keep them low.
Amongst the bosses to be allegedly involved in these agreements was former CEO of Apple, Steve Jobs, who died in October 2011.
A set of email exchanges that were to be used as evidence to support the lawsuit are reported to show Jobs and former Google chief executive Eric Schmidt agreeing to fire a Google recruiter after he was identified as being responsible for soliciting an Apple employee for Google.
In the exchange Schmidt is seen telling Jobs that the recruiter will be fired as a result of his actions, to which Jobs replied with a smiley face.
Other examples put forward by the team filing the lawsuit, reportedly show Schmidt advising discretion when it came to sharing the company’s no-cold call agreements with competitors.
According to a court filing, Schmidt told a Google human resource manager that he preferred the agreement to be shared verbally, as he “didn’t want to create a paper trail over which we can be sued later?'"
For the four companies involved, the settlement represents just a fraction of the money that they could have had to pay out if the court proceedings went ahead and they lost.
The lawsuit from the employees demanded $3m, and this could have tripled to almost $9m under US anti-trust laws.
The portion of the $324m that each of the companies will have to pay will be a drop in the ocean when compared to the profits each company records on a yearly basis.
In the first quarter of 2014, Google has already recorded profits of £15.4bn. While Apple supplemented with a high level of iPad and iPhone 5 sales, has seen their profits rise to £10.6bn.
While the companies agree that some employment arrangements were made, they say that these were never with the intention of keeping wages down.
Both Intel and Adobe, who were also accused of being part of the agreements, said that they denied any wrongdoing.
Adobe said in a statement: "We firmly believe that our recruiting policies have in no way diminished competition for talent in the marketplaces.''
While, Chuck Mulloy, spokesman for Intel, said the firm chose to settle "to avoid the risks, burdens and uncertainties of ongoing litigation.''
Google and Apple declined to comment.
This isn’t the first time that Google and Apple have been embroiled in a case of in which they have tried to manufacture employment agreements with other Silicon Valley companies.
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