Suit Alleges Silicon Valley Execs Conspired To Keep Wages Low

By Peter Levine posted in Employment Law on October 30th, 2013

Class action lawsuit in an alleged “overarching conspiracy”

U.S. District Judge Lucy Koh in San Jose has granted class action status to a lawsuit alleging an “overarching conspiracy” amongst major Silicon Valley companies to suppress employee compensation obtained from moving from one company to another.

By winning the class action certification, the more than 60,000 plaintiffs made up of technical employees including: software and hardware engineers, component designers, application developers, among others, now have more leverage to seek larger financial settlements than if they were to sue individually.

In 2011, five software engineers sued Adobe Systems Inc., Intel Corp., Apple Inc., and Google Inc., among others over their hiring practices, alleging that the Silicon Valley companies conspired with other local executives to limit the workers’ pay by barring them from moving from one company to another, thus suppressing employee compensation to artificially low levels.

In conspiring to eliminate competition for labor and depriving workers of job mobility as well as hundreds of millions of dollars in compensation, the defendants were accused of violating the Sherman Act and Clayton Act antitrust laws.

In their original complaint, the plaintiffs sought certification of an “All Employee” class that would include every salaried employee throughout the United States who worked for the defendant companies between 2005 and 2009. That number was estimated to be more than 100,000.

The plaintiffs limited their class action group, now down to 60,000 after Judge Koh said they had yet to show enough in common amongst these proposed class members to allow them to sue together.

Much of the case built on email exchanges

The case has been closely watched in Silicon Valley as much of it has been built on email exchanges between top executives, including the late Apple Chief Executive Steve Jobs as well as former Google Chief Executive Eric Schmidt.

In granting class-action status to the suit Koh cited what she termed “considerable, compelling common proof” that the Silicon Valley companies engaged in antitrust behavior by agreeing not to try to lure away each others’ employees.

Peter K. Levine
A Professional Law Corporation

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