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DOJ’s employee-solicitation consent decree for Silicon Valley companies: The exceptions are the most interesting part

UPDATE 2011-05-05: A software engineer in Silicon Valley filed a class-action lawsuit against Adobe, Apple, Google, Intel, Intuit, and Pixar, alleging that the six companies illegally fixed compensation levels and suppressed competition for employee talent. QUESTION: I wonder whether any of these companies have arbitration provisions in their employment agreements, and if so, how they will come into play, especially after the U.S. Supreme Court’s decisions in Stolt-Nielsen and Concepcion, essentially saying that arbitration provisions trump class-action rights? Might the employees be required to do individual, non-class arbitrations — even against companies with which they had no arbitration agreement? UPDATE 2014-04-24: Four of the companies — Adobe, Apple, Google, and Intel — reportedly settled the case on undisclosed terms (which soon enough will be made public).

UPDATE 2014-04-25: The settlement totaled US$324 million, according to Reuters.

The conventional wisdom always seemed to be that agreeing not to hire your business partners’ employees could be an antitrust problem, but that it was OK to agree not to solicit them. That still seems to be permitted — albeit with significant restrictions and new recordkeeping- and reporting requirements — by the proposed five-year consent decree in the case the Justice Department brought against Adobe, Apple, Google, Intel, Intuit, and Pixar.

Section V of the agreed proposed final judgment allows “no direct solicitation” provisions for the following types of agreement — if they • have a stated sunset date, • are “narrowly tailored to affect only employees who are anticipated to be directly involved in the agreement,” and • identify the affected employees with reasonable specificity:

  1. employment- and severance agreements for one’s own employees;
  2. as reasonably necessary for mergers and acquisitions, investments, divestitures, and related due diligence;
  3. reasonably necessary for contracts with consultants or recipients of consulting services, auditors, outsourcing vendors, recruiting agencies or providers of temporary employees or contract workers;
  4. reasonably necessary for the settlement or compromise of legal disputes; or
  5. reasonably necessary for (i) contracts with resellers or OEMs; (ii) contracts with providers or recipients of services other than those enumerated above; or (iii) the function of a legitimate collaboration agreement, such as joint development, technology integration, joint ventures, joint projects (including teaming arrangements), and the shared use of facilities.


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