Another Area Where There's Tremendous Innovation Without Patents: Wallets On Kickstarter

Big Silicon Valley Firms Aren't Going To Get Off That Easily For Their Anti-Poaching Agreements

from the open-up-that-wallet dept

Fri, Aug 8th 2014 5:38pm — Mike Masnick

A few months ago, we reported on how Google, Apple, Adobe and Intel had agreed to settle a lawsuit concerning their collusive hiring practices, in which those companies (and a few others that had already settled) agreed not to "poach" employees from each other. As we had noted, these anti-poaching agreements (led by Steve Jobs who pushed them on many other companies) are a really hideous practice that is not only bad for the employees of those companies, but bad for innovation in general. As we've detailed, allowing the easy movement of employees between innovative tech companies is a huge part of why Silicon Valley became Silicon Valley. Employees shifting jobs between these companies often helps with greater idea sharing, different perspectives and speeds up innovation and (especially) big breakthroughs. It's almost an informal "open sourcing" of certain information, in which employees who are job hopping act as conduits of important information moving between companies in an informal manner.

That's why it's a very good thing that the practice is being called out and shamed -- and hopefully episodes like this can be put in the past. In our comments on the original settlement, however, many people pointed out that the $324 million actually seemed a little "light" given the number of employees involved. It would appear that Judge Lucy Koh agrees, and has rejected the settlement agreement as being too low, saying that the companies should try again with a higher number, starting at a minimum of $380 million.

The ruling also includes more details of how these agreements got started, showing Steve Jobs basically bullying lots of other CEOs -- and demonstrating just how scared everyone was of Jobs. They all seemed to fear going against him and having him declare "war" on them and going after their employees. Either way, it looks like the companies are going to have to cough up more money -- and hopefully this (again) means that this kind of anti-poaching practice is ended. Hopefully, these companies stop thinking just about how employees leaving hurt themselves, but about how they too can benefit from inbound employees.

In fact, there's a new book by Reid Hoffman, Ben Casnocha and Chris Yeh, called The Alliance, which, among other things, recommends that companies get much better about learning (1) how to let employees leave when it's in those employees' best interests and (2) how to keep a strong "alumni" network, recognizing that can benefit them in the long run. Hopefully the ideas like that, as well as all of the evidence on the importance of job shifting for enabling innovation, will mean these kinds of practices go away. I'm sure a bigger payout due to the lawsuit won't hurt either.

No Poach Settlement Rejected (PDF)No Poach Settlement Rejected (Text)

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Filed Under: anti-poaching, collusion, innovation, job shifting, non-competes, poaching, settlement, steve jobs
Companies: adobe, apple, google, intel

18 Comments

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That One Guy (profile), 8 Aug 2014 @ 7:23pm

If the judge wants to stop it from happening in the future, they need to put some real teeth into the fines. Rather than going for a flat amount, go with a percentage of yearly earnings, where even 1% would likely be pretty huge, with a threat of the percentage doubling each time they are found to have been guilty of the practice in the future.

The fine also needs to be against each company individually, as while 380 million would smart against a single one of the companies, split four ways it would only be 95 million, which is much easier for them to shrug off.
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KJ (profile), 8 Aug 2014 @ 8:22pm

Massachusetts companies use noncompetes
Meanwhile in Massachusetts, where teen camp counselors and college interns have been required to sign 1-year noncompetes for summer jobs (NYT: http://goo.gl/hFBgIq), a legislative conference committee killed reform for 2014 in closed session: http://goo.gl/nP9OQd. This was despite the Governor's support, 32-7 Senate support, and anticipated House support.

No need for anti-poaching agreements if you can keep employees from changing jobs with noncompetes.
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Coyne Tibbets (profile), 8 Aug 2014 @ 11:02pm

A pittance and a bit...
No, no, that's too little. But for 15% more... (Because you know their new estimate will work out to be $380,000,000.01.)

In any case, I'm sure the companies are horrified: The judge is demanding a whole 1.94 hours more of their annual net income (13.14 hours instead of 11.20). How can they possibly expect to make a profit under such conditions?

I'm sure they've learned their lesson and will be much more circumspect about their future blacklisting programs.
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Anonymous Coward, 8 Aug 2014 @ 11:37pm

Alumni networks
What a great idea alumni networks are for companies. In other spheres, I believe it is referred to as a revolving door (see, for example, big content & Government)
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Anonymous Coward, 9 Aug 2014 @ 3:34am

Jobs' epitaph should simply read "Not a very nice man"
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Mike Masnick (profile), 9 Aug 2014 @ 6:07am

Re: Alumni networks
What a great idea alumni networks are for companies. In other spheres, I believe it is referred to as a revolving door (see, for example, big content & Government)

There's a clear issue with it between public and private sector, but I see little issue with it strictly in the private sector.
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Anonymous Coward, 9 Aug 2014 @ 2:11pm

Compensation Scale
Here is an idea for a scaling the compensation: for the period of first known start of their conspiracy against the market up until today they need to retroactively double the pay of every tech worker during that time period. It would teach them a good lesson about trying to screw over their employees to save money. And that pool is totally separate from the lawyer fees.
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TestPilotDummy, 10 Aug 2014 @ 11:59am

How about the Hospitals? No difference, that's what..
Yeah I am a kind of PARROT this morning, (braaack) pointing out, there's not much difference with Silicon Valley when you compare it to the Medical Care industry.

You should of course get it from the horse's mouth for full comprehension enjoyment, I explain things like crap...I'm only a parrot remember? (braaack) how about a non grain cracker please!?

http://market-ticker.org/akcs-www?post=229285
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Whatever, 10 Aug 2014 @ 6:05pm

Mike Masnick is a Silicon Valley shill and this article proves it.
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LduN (profile), 11 Aug 2014 @ 7:18am

Could become like the mining industry, at least in Northern Quebec. We hire someone out of college/technical school, they work here for 2-3 years to get experience and leave for another mining company/project. Likewise, every once in a while we see an experienced employee come in with some experience, gets hired nad works for a few years and moves on. Seems to me that an average mine worker will woek 2-5 years for a specific mining comapny/project before moving on to new things. Since there is so much turn around in the mining sector, most mines are pretty friendly with each other and will cooperate on certain things together (mine rescue being the major case). Just the other day we needed to find a specific system to fullfill our needs, so we called about 5 other nearby mines (all "competitors") asking what systems they have in place and doing a comparison. Seems like this would be a good idea for tech companies.
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nasch (profile), 11 Aug 2014 @ 10:53am

Re:
Seems to me that an average mine worker will woek 2-5 years for a specific mining comapny/project before moving on to new things. Since there is so much turn around in the mining sector,

That doesn't sound like high turnover compared to the tech sector. I don't know if anyone has actual numbers.
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LduN (profile), 11 Aug 2014 @ 12:14pm

Re: Re:
this turnover (at least at this mine, and others that I know of) happens at all levels, from miners, to IT, to accountants and even to upper management onsite.
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JohnMc, 11 Aug 2014 @ 1:46pm

Best solution
I think the best solution is not money, its going to the lawyers anyway. No, an agreement should be bartered that all the companies involved may not utilize H-1B's/L1's/Q's for a decade.
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FYTW, 11 Aug 2014 @ 2:25pm

Re: Massachusetts companies use noncompetes
The reason SV companies resorted to collusion rather than noncompete agreements is because noncompetes are generally illegal in California.
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nasch (profile), 11 Aug 2014 @ 2:55pm

Re: Best solution
No, an agreement should be bartered that all the companies involved may not utilize H-1B's/L1's/Q's for a decade.

What does that have to do with the collusion that this is about? Are you suggesting that because those workers have a harder time changing employers? And how do you think this agreement will be reached without using lawyers?
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Anonymous Coward, 11 Aug 2014 @ 8:32pm

The VC's were involved too. Startups were given lists of companies that they were not allowed to recruit from. There is a lot more to this story.
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Anonymous Coward, 16 Aug 2014 @ 10:28am

Re:
Not sure how you draw that conclusion. You give no citation for your theory, and thus it can be, and is, easily dismissed as someone who hates Mike Masnick.
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Tech News Drive Daily, 21 Aug 2014 @ 11:14am

Offering employees Incentives
I study Silicon Valley, and they are still offering certain employees incentives to leave and work for some other company. I would say competition is healthy, but doing this in secret must be made illegal. The true facts, are, if you work with your competition and not against it, then you will achieve a more profitable business
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