Workers in Silicon Valley no-hire scandal granted class-action status

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Programmers and other technical employees whose wages were allegedly kept artificially low by widespread no-hire pacts between Apple, Google, Adobe, and Intel are being granted class action status. California district court judge Lucy Koh ruled that the antitrust concerns of the "overarching conspiracy" between 2005 and 2009 warranted trying the case en masse. According to a lawyer representing the plaintiffs, over 64,000 employees who worked at the four companies are potential class members. Intuit, Pixar, and Lucasfilm had been named as defendants in the original complaint, but have reached tentative settlements with the plaintiffs totaling $19 million, Bloomberg reports.

Judge Koh declared the defense's criticisms "unpersuasive."

As evidence of the impact to wages that the no-hire pacts are believed to have created, the plaintiffs relied on expert opinion from a pair of respected economists who cited "economic studies and theory, documentary evidence, and statistical analyses." Opposing experts tried to poke holes in the models presented to the court, but to no avail — judge Koh declared the defense's criticisms "unpersuasive." The defense further tried to show that individual managers had broad discretion for setting employees’ wages, but their contentions ran counter to the statistical evidence furnished by the plaintiffs, namely that "in 97 percent of class member employee-years," pay was within a range prescribed by the companies. In other words, individuals’ salaries showed little evidence of competitive bidding between would-be employers.

The judge also cited the abundance of documentary evidence, including statements from executives like senior Google VP Alan Eustace that the "long-term… right approach is not to deal with [solicitation of Google employees] as one-offs but to have a systematic approach to compensation that makes it very difficult for anyone to get a better offer (emphasis in original)." Earlier this year, email exchanges involving former CEOs Steve Jobs of Apple, Eric Schmidt of Google, Paul Otellini of Intel, and Ed Colligan of Palm showed ample evidence of exactly how the "systematic approach" to protecting employees from poaching actually played out.

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