Apple Balla reports that, in order to keep their highly qualified staff from defecting to the competitor, high tech companies, which includes Apple, Pixar, Adobe and Google, came up with an arrangement which prevents them from hiring competitor’s staff. The movement of staff in high demand is fairly common as people are trying to sell their skills to the highest bidder. The arrangement is making it impossible for one company to hire competitor’s employee for a higher salary, and it effectively prevents employees from being hired by other big companies in the industry. Without the arrangement, if a company wanted to keep a staff member who is offered higher pay from another company would have to offer a pay raise, effectively starting a bidding war over the employee in question.
The practice of ‘do-not-hire’ seriously hurt the career prospects of the highly skilled tech employees, since it effectively closed for them the door of other big companies in the industry.
This same class action suit was attempted earlier this year, but was turned down by the judge for insufficient evidence. Apparently, the plaintiffs came up with more evidence, the judge reversed his decision, and granted the lawsuit a class action status. The trial is officially scheduled for May next year, but the delay is almost certain, as the sued companies are expected to use any trick in the book to postpone the trial.
The same high tech companies were sued a few years ago by the Department of Justice, for the same infringement. No damages were awarded in that case, but that is likely to change with the new class action suit.