Is It An Antitrust Violation To Agree Not To Poach Employees From Competitors?

from the not-entirely-clear dept

The news broke this week that a bunch of big name Silicon Valley companies are under investigation by the Justice Department for their hiring practices and potential antitrust concerns. The specific issue appears to be that the companies may have agreed to not try to poach top execs from certain companies. Apparently there was nothing stopping the employee from getting a job at one of these companies, if they took the initiative -- but the companies wouldn't initiate the attempt. In most cases, the idea was not to poach from partners -- which might just be good business sense (pissing off partners generally isn't a good idea). Where it gets tricky is the accusation that some companies had written agreements not to poach, which could lead to some charges of collusion. Oddly, the NY Times article's title claims that the issue is "unwritten rules" when the details of the article suggest it's not the unwritten, but the written rules that are the problem. There have been studies that suggest that root of Silicon Valley's success was the easy movement of people from job to job -- so if it's true that companies are holding back trying to get the best employees to move around, they may actually be doing a lot more harm to themselves anyway. And, on the whole, it does seem like there's an awful lot of movement between big name companies. Just this week at the Conversational Marketing Summit, one of the speakers had a musical chairs presentation that went on for a long time showing a bunch of execs and how they played musical chairs between Yahoo, Google, Microsoft, AOL, News Corp. and Facebook.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    icon
    Ronald J Riley (profile), Jun 4th, 2009 @ 3:05am

    Intentionally Suppressing Wages & Opportunities

    This is industry collusion to cheat employees of the opportunity to let market forces maximize their income and their chances to achieve their full professional potential.

    Employees who have been limited as a result of this should look at bringing a class action lawsuit and perhaps consider bringing a civil RICO case.

    It is interesting that the companies conspiring in this manner are also well know for ripping off American inventors. I noticed that a number of the perps are members of the Coalition for Patent Fairness. I have long observed that companies who have ethical issues in one part of their business are often equally disreputable in many other aspects of their business conduct.

    Ronald J. Riley,

    Speaking only on my own behalf.
    President - www.PIAUSA.org - RJR at PIAUSA.org
    Executive Director - www.InventorEd.org - RJR at InvEd.org
    Senior Fellow - www.PatentPolicy.org
    President - Alliance for American Innovation
    Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
    Washington, DC
    Direct (810) 597-0194 - (202) 318-1595 - 9 am to 8 pm EST.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Da_ALC, Jun 4th, 2009 @ 3:28am

      Re: Intentionally Suppressing Wages & Opportunities

      Here here!

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Tgeigs (profile), Jun 4th, 2009 @ 6:58am

      Re: Intentionally Suppressing Wages & Opportunities

      "This is industry collusion to cheat employees of the opportunity to let market forces maximize their income and their chances to achieve their full professional potential."

      I'm a little frightened here, because I actually agree with you. I have only one, tiny litte question: Do the employers also reserve the right to terminate employees if they seek other employment? Becuase if they do, and neighboring industry competitors can't recruit them, then now no one can move jobs...like...ever.

      "Employees who have been limited as a result of this should look at bringing a class action lawsuit and perhaps consider bringing a civil RICO case."

      And also they should form a paramilitary guerilla group, mutter incoherent ramblings about God on two-way radios, and build two bomb shelters, one for the men, and one for the women....Or, you know, maybe we just let the DoJ do their job before losing our fucking minds and filing ANOTHER lawsuit, as if this country didn't have enough of them.

      "I have long observed that companies who have ethical issues in one part of their business are often equally disreputable in many other aspects of their business conduct."

      So you're saying that a corrupt company shouldn't be trusted...how novel of you. I think you should patent that idea.

      Tgeigs,

      Speaking on behalf of God, Allah, and Yaweh...Oh, and Jobu from Major League, love that guy.
      Dictator - www.pretentious_blog_signatures.org - TG at pretentious_blog_signatures.org
      Executive Blowhard - www.blahblah.org - TG at blahblah.org
      Senior Hard On - www.ArentIAmazing.org
      King Shit - Alliance for Crazy Long Blog Signatures
      Caregiver of The Deus Ex Fanclub on behalf of deceased UNATCO Director Joseph Manderley
      Liberty Island, NY
      Direct 800-1-UNATCO - 1 pm to 2 pm EST (I invented something, so I don't work more than an hour a day....ever).

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    OneDisciple, Jun 4th, 2009 @ 4:10am

    Re: Intentionally Suppressing Wages & Opportunities

    Ronald J. Riley,
    I actually agree with what you are saying!

    (Sweet I have trolled with Ronald J. Riley)

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      some old guy, Jun 4th, 2009 @ 4:33am

      Re: Re: Intentionally Suppressing Wages & Opportunities

      Oh great, Ronald makes a coherent thought for once, and everyone agrees with him.

      Too bad you're all wrong.

      Noone in the article is doing anything wrong by their employees. They are actually doing something GOOD for their employees by creating a less hostile recruiting atmosphere.

      The companies in question ARE NOT RESTRICTING their employees. They are restricting PARTNERS from screwing each other over by stealing their execs from each other.

      This is actually a really good thing. It's not anti-competitive at all. By having these agreements in place, it allows company a to be comfortable sending people for a meeting at company b without having to worry that the entire meeting is nothing more than a recruiting sham.

      What's so bad about that? How is it immoral?

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Griper, Jun 4th, 2009 @ 4:32am

    On the flip side, the people going from company to company are also the ones bringing their bad habits. Not every exec is cut out for the job. How many times has a company on a good track been suddenly skewed off course by an incompetent exec?
    I guess you have to take the good with the bad.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Chronno S. Trigger (profile), Jun 4th, 2009 @ 5:09am

      Re:

      I think what bothers me more is that the exec job has such a high turnover rate that they feel the need to stop head hunters. There is so much turnover that the calls to get someone else became a nuisance. I guess hiring someone from the inside who may actually know what they're doing is out of the question?

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    OneDisciple, Jun 4th, 2009 @ 4:42am

    Re: Re: Re: Intentionally Suppressing Wages & Opportunities

    Old Guy,
    you make a very good point!

    (Holy Crap i have trolled with some old guy and Ronald in the same post) LOL

    I have to ask though who is really getting screwed here? aren't the silicon valley execs. some of the highest paid in america? all that pay gets past on to the consumer. so no matter how you look at this we are getting screwed.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      mobiGeek, Jun 4th, 2009 @ 7:14am

      Re: Re: Re: Re: Intentionally Suppressing Wages & Opportunities

      The SV execs are the ones who put the agreement in place themselves.

      No one is getting screwed here. The execs are free to leave and go to any of the thousands of companies that are out there, save a few partners that signed this agreement.

      RJR is offbase (no surprise). It isn't "all employees". The companies are not "colluding". Execs aren't being denied the chance "to achieve their full professional potential".

      It is the execs themselves that set this up, doing this for the good of their own companies, because, you know, they "get it".

      RJR truly does not "get it". He flies off the handle using broad and inaccurate statements, mapping this story onto his other biases.

      I have long observed that people who need to sign their messages with a monstrous list of associations and titles tend to map any and all issues onto the obsessively biased single-purpose cause they support.

       

      reply to this | link to this | view in chronology ]

      •  
        icon
        Tgeigs (profile), Jun 4th, 2009 @ 7:33am

        Re: Re: Re: Re: Re: Intentionally Suppressing Wages & Opportunities

        "I have long observed that people who need to sign their messages with a monstrous list of associations and titles tend to map any and all issues onto the obsessively biased single-purpose cause they support."

        That is entirely untrue. This issue speaks directly to the massive Nazi influence on today's government.

        Love,

        Tgeigs,

        Speaking on behalf of God, Allah, and Yaweh...Oh, and Jobu from Major League, love that guy.
        Dictator - www.pretentious_blog_signatures.org - TG at pretentious_blog_signatures.org
        Executive Blowhard - www.blahblah.org - TG at blahblah.org
        Senior Hard On - www.ArentIAmazing.org
        King Shit - Alliance for Crazy Long Blog Signatures
        Caregiver of The Deus Ex Fanclub on behalf of deceased UNATCO Director Joseph Manderley
        Liberty Island, NY
        Direct 800-1-UNATCO - 1 pm to 2 pm EST (I invented something, so I don't work more than an hour a day....ever).

         

        reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Jun 4th, 2009 @ 7:40am

        Re: Re: Re: Re: Re: Intentionally Suppressing Wages & Opportunities

        Geekimob:

        Usually your posts are a bit more coherent. I got a bit lost in this one.

        There are a number of companies that have "anti-snipe" rules. Those rules pretty much apply across the board. In fact, One company I worked for had a "no-hire" rule with another company because the moving back and forth was harming both companies (the two companies were within a half mile of each other and employees were in high demand so for a while people were moving very frequently, killing training programs). Note that this was an agreement between these two companies and did not prevent anyone from going to any other company any where else.

         

        reply to this | link to this | view in chronology ]

  •  
    identicon
    dvnt, Jun 4th, 2009 @ 5:49am

    phhft

    I am just speaking for myself but I went in for a job interview for a very reputable stock firm. The firm offered a yearly salary of 180,000.00 USD. I have not even walked out of the building when I got a call from another firm, and apparently they where scouting me for several weeks and offered a salary of 250,000.00 USD. So of course I took the higher pay. I think that DOJ has nothing better to do but sit around and attack these companies, and waste the American peoples hard earned tax dollars.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    fogbugzd, Jun 4th, 2009 @ 6:00am

    Good for companies vs good for the economy

    Easy movement between companies is good for the overall economy, but it may be bad for individual business. One mistake we often make is to say that if something is good for businesses it is good for the economy. That is definitely not the case. In fact, if something is good for consumers and employees, then it is more likely to be good for the economy. However, it is the businesses who hire the most lobbiests.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous, Jun 4th, 2009 @ 6:40am

    not just execs

    It's not just execs. My employer has written contracts with vendors, customers, and competitors prohibiting them from initiating head hunting even among rank and file employees.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      mike42 (profile), Jun 4th, 2009 @ 7:36am

      Re: not just execs

      Exactly. The article says, "top engineers, marketers and executives". Being an engineer that was blocked from moving by an UNWRITTEN deal by my old employer (albeit not in Silicon Valley) I really can't describe how unfair this practice is. Basically, I would have had to quit the company before anyone would even talk to me. And if you are feeling so bad about your job that you want a move, the uncertainty of quitting without another job lined up is a huge obstacle.

      Consider, too, that a manager's apparent competency often has attrition factored in. These agreements hamper proper feedback to higher management.

      I'm not sure if it can truly be called an "anti-trust" issue, but it is certainly unfair to employees.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        AC, Jun 4th, 2009 @ 7:43am

        Re: Re: not just execs

        Ok. If the agreement goes beyond companies agreeing not to head-hunt (at least not to initiate it), then there are several ways that various 'agreements' become unfair (and even anti-competitive). For one, where I work, software development, I signed an agreement that basically states I can't use my knowledge for 2 years or something like that after leaving this place.

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Ronald J Riley (profile), Jun 5th, 2009 @ 3:20am

          Re: Re: Re: not just execs

          Companies write lots of provisions into contracts which are not enforceable. They count on employees not looking into what the law allows. They will then have a clause in the contract which states that if any part is deemed unenforceable that the rest of the contract stands.

          There has been a tendency in corporate circles to overreach in contracts. This has happened in employment contracts and in consumer contracts. Banking, insurance, and a host of others are trying to short circuit peoples ability to have their day in court. It is a bald faced attempt to deny people justice.

          Ronald J. Riley,

          Speaking only on my own behalf.
          President - www.PIAUSA.org - RJR at PIAUSA.org
          Executive Director - www.InventorEd.org - RJR at InvEd.org
          Senior Fellow - www.PatentPolicy.org
          President - Alliance for American Innovation
          Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
          Washington, DC
          Direct (810) 597-0194 - (202) 318-1595 - 9 am to 8 pm EST.

           

          reply to this | link to this | view in chronology ]

  •  
    identicon
    Korrosive, Jun 4th, 2009 @ 7:02am

    Nothing wrong here

    I think this actually fosters trust (anti-antitrust). Without these agreements in place, wouldn't the bigger company simply 'snipe' the best of the best execs, leaving the smaller companies to survive with what's left? Quite a strecth, but I think it is akin to the idea behind salary caps in the NBA?

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      mobiGeek, Jun 4th, 2009 @ 7:21am

      Re: Nothing wrong here

      It is worse than simple "sniping". The issue at hand between execs at partnering companies is that the partnership agreements can be compromised if the exec negotiating on one side is also in talks to work for the other side.

      It makes extremely good sense to have this type of agreement between partners. It establishes a trust that negotiations and contractual agreements are done in good faith, each party being equally satisfied with their business arrangements. (Or both sides being equally dissatisfied...)

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Ronald J Riley (profile), Jun 5th, 2009 @ 3:12am

      Re: Nothing wrong here

      Has it occurred to anyone that the best people may not want to work for the biggest company? Smaller companies are more nimble and frankly much more satisfying to work for.

      Ronald J. Riley,

      Speaking only on my own behalf.
      President - www.PIAUSA.org - RJR at PIAUSA.org
      Executive Director - www.InventorEd.org - RJR at InvEd.org
      Senior Fellow - www.PatentPolicy.org
      President - Alliance for American Innovation
      Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
      Washington, DC
      Direct (810) 597-0194 - (202) 318-1595 - 9 am to 8 pm EST.

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    Paul Brinker (profile), Jun 4th, 2009 @ 8:05am

    If the aggreement is to not try to offer jobs to people at the other company I dont see this is as a bad thing, if the aggreement is worse then that, say not to talk about employment at all so that I cant even talk about a job with a partner (sorry you currently work for X, we cant talk to you)

    but if you take this to a crazy level, say you work for wallyworld, how many people now cant even talk to you because thay work in the supply chain for them? Thats why the more aggressive aggreements are geting looked at.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Jun 4th, 2009 @ 11:16am

    Most consulting companies have in their contracts that they won't hire the clients employees and the client won't hire the consulting companies employees. That is standard as far as I know.

    You want to talk anti-trust?

    NFL football draft. Players are bound by a collective bargaining agreement that they had no say in.

    Imagine the big accounting companies getting together and saying "we are going to have a draft, and if someone decides not to be in our draft and accept our pay and where they have to live, then they can't work for any of our accounting firms."

    How is the NFL draft legal? The guy from Ohio State was going to challenge it, but getting busted for pot didn't help his case.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    l duvall, Jun 6th, 2009 @ 9:19am

    anti-poaching top execs? what about the grunts?

    I left the IT sector in 1998 when I was told in a phone interview that I "couldn't be hired" for a new job, at a higher salary, because of the company that I worked for. And both jobs were low-level tech support.

     

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This