Tech giants Google, Apple and several other companies recently lost a significant hearing that will allow 60,000 tech workers from as far back as 2005 to sue as a group for wages lost in a massive wage-fixing scandal. The scandal stems from a deal between Apple and Google over recruiting practices between the two companies.
For this near decade-long scheme, the affected workers are now able to pursue these giants for $9 billion dollars in lost wages. What began as a case in 2011 from five engineers alleging the conspiracy has now snowballed after emails from top CEOs from Apple and Google came to surface, which later implicated other companies in the fix.
While many of the lesser featured companies named have settled, many dollars and companies still remain. With strength in numbers through a class action lawsuit, the workers will now be able to pursue the companies for higher values than they could as individuals. Before the case gets brought to trial, let’s take a look at how this came to pass.
How It All Went Down
The fix began back in 2005 after an agreement between Google’s Eric Schmidt and Apple’s Steve Jobs detailed the dos and don’ts of hiring. The pact was reached after Apple became angered over Google’s recruiting of top Apple talent. This anger was only furthered due to Google’s reputation for driving recruitment and incentives, both of which drove salary demands for workers in Silicon Valley.
The plan included an agreement where the companies vowed to share hiring policies as well as wage information to suppress the growth of salaries during the tech industries booming mid-2000s years. Later, Schmidt informed a top official, Shona Brown, to reference the agreement, “verbally, since I don’t want to create a paper trail over which we can be sued later…”
With similar agreements being had between eBay and then CEO Meg Whitman, it became apparent that there was a massive conspiracy amongst many companies. These started to come to surface during an Obama administration backed investigation from the Department of Justice that has been described as an “overarching conspiracy.” This has brought action from the federal level as well as from the state of California. All of this became easier to sort out once the verbal trail reverted to email exchanges became more and more companies being looped into the illegal pact.
However, before all this could come to light emails detailed how other companies were looped into the mix, including Adobe. What started to form was a tit-for-tat type of recruiting threat. If a company did not agree to back off from recruiting top talent and officials their company would be free grounds to be poached by the companies in the agreement.
Instead of facing a potential mass exodus to these companies, the new companies joined in to keep their employees without having to pay salaries in line with demand and the market. This would only grow through the years as the Valley’s close knit group of executives continued to speak.
As the pact snowballed to include several top companies (Facebook being one of the few to decline) the DoJ and those first key engineers became key in seeking the money lost through the deception. Companies are now agreeing that they will not inform “rivals” that they are offering positions to those employees. Beyond that, “cold calling” companies will now be back in play as companies seek talent. Hopefully another fix won’t be in soon.
What Happens Now
In short, a class action suit. The once five-person suit will now reach close to 60,000 in a bid to recover the $9 billion lost over the last decade. By going into a class action suit, the workers can not only seek a higher value, but also do it at a lower cost. As many companies will most likely be settling, it will be interesting to see what kind of repayment will make it to the deserving workers.
Some from outside of the situation have been saying this is an issue where well compensated workers are going to get more money. However, this is a matter of fair play and fair value. With this case heading to court, Silicon Valley is receiving a message that this type of action is not allowed. Regardless of their salaries, these workers had their true value and opportunities suppressed.
What remains to be seen is if this is the end of these types of scandals. As the tech industry faces another scandal, Silicon Valley’s reputation takes another hit in the public eye. As is the case with most CEOs, this probably does not matter much to them.
Will the public take up arms on this issue? Baring a major revelation, not much more than it has. Unless criminal charges are filed or these tech giants bottom dollars begin to decline, not much else will change. Ideally, fair hiring practices will be the norm and the true value of these talented individuals will be had going forward.
However, with rampant claims and findings of wrongdoing in the industry, what is actually trustworthy? Is the tech industry any different than other massive sectors of the business world? As more scandals come to light, it seems that the answer is no. Here’s hoping that another email chain hasn’t already started.
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