Court Denies Proposed $324 Million Settlement on Silicon Valley Hiring

Silicon Valley is known for companies like Apple and Google – and great innovations like the iPhone. Soon, Silicon Valley might also be known for its conspiracy to keep wages low for employees.

A judge recently rejected a $324 million settlement proposed by Apple, Google, and two other tech companies finding there is “ample evidence” that the companies were involved in “an overarching conspiracy” to violate antitrust laws. The case alleges that tech companies including Apple, Google, Intel, and Adobe agreed not to hire each other’s employees.

Lawyers filed a class-action lawsuit on behalf of nearly 64,000 employees arguing that the tech companies agreed not to hire engineers and programmers from each other. These employees were building the key software that the companies profited from. As a result of this arrangement, the employees suffered because the companies could pay them lower salaries. This also allowed each company to keep their key programmers, preventing other companies from getting access to highly qualified individuals – and information.

The proposed settlement would have paid each employee about $4,000.00. The lawyers would have received twenty-five percent of the overall settlement. Judge Lucy Koh rejected the settlement as too small saying that it failed to be “within the range of reasonableness.”

Judge Koh said she thought the case was strong and the evidence compelling, which includes incriminating materials from Steve Jobs (co-founder of Apple) and other tech executives. In the ruling, Judge Koh wrote that there was substantial evidence indicating Mr. Jobs “was a, if not the, central figure in the alleged conspiracy.” One example of his involvement is an email he wrote in 2005 after Google tried to hire some of Apple’s engineers. In the email, Mr. Jobs wrote, “If you hire a single one of these people, that means war.” Another example occurred in 2007. After Mr. Jobs became upset that a Google recruiter approached an Apple employee, Google fired the recruiter to appease Mr. Jobs.

If a jury rules in the employees’ favor, damages could be tripled due to antitrust penalties. While Apple, Google and other tech companies have produced great products, that does not excuse them from fairly paying their employees.