Some of the biggest technology giants in the world including Apple, Adobe, Lucasfilm and Pixar are being slammed with a class-action lawsuit from former employees who claimed the companies worked together to fix employee pay at certain levels.
The lawsuit comes just months after the American Department of Justice settled an investigation into the same matter with many of these companies, who according to reports, all wanted to avoid charges over an alleged agreement not to poach staff from each other.
The alleged agreements were designed to curb the growth of employee salaries, as workers within Silicon Valley often hop from company to company within a small amount of time, inflating their compensation.
The new lawsuit claims these companies did just that. A former LucasFilm employee, Siddharth Hariharan, is leading the charge and says the companies engaged in a “no solicitation” agreement. In some cases companies added other firms to an internal list of businesses banned when looking for new employees.
“My colleagues at Lucasfilm and I applied our skills, knowledge and creativity to make the company an industry leader,” he said in a statement.
“It’s disappointing that, while we were working hard to make terrific products that resulted in enormous profits for Lucasfilm, senior executives of the company cut deals with other premiere high tech companies to eliminate competition and cap pay for skilled employees.”
The full number of companies attacked in the lawsuit includes Adobe, Apple, Google, Intel Intuit, Lucasfilm and Pixar, which is a subsidiary of Walt Disney. Apple chief executive Steve Jobs still maintains a seat on the company’s board.
Joseph Saveri of law firm Lieff Cabraser Heimann & Bernstein says the issue is that competition creates better salaries and career opportunities – stopping this has reduced potential compensation.
“We estimate that because of reduced competition for their services, compensation for skilled employees at Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar was reduced by 10-15%.”
“These companies owe their tremendous successes to the sacrifices and hard work of their employees, and must take responsibility for their misconduct.”
The lawsuit argues that Lucasfilm organised deals with Pixar, while Apple and Adobe had a deal of their own. Google also organised an agreement with Apple, the suit alleges, as both company’s shared a board member. Google also started an agreement with Intel, it is alleged, but Apple seems to be the key.
“Every agreement alleged herein directly involved a company either controlled by Apple’s CEO, or a company that shared a member of its board of directors with Apple,” the suit claims.
“As additional companies joined the conspiracy, competition among participating companies for skilled labor further decreased, and compensation and mobility of the employees of participating companies was further suppressed.”
The Department of Justice has warned it has noticed this type of activity occurring in other industries, and the reported settlement last year was an attempt to avoid a lengthy court battle.
Just weeks after the first report of the settlement was published, Google announced a company-wide pay rise for all employees worldwide. It is not clear if the two incidents are connected.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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