In a class action lawsuit filed Wednesday, an Indian-American became the lead plaintiff in a case against high-tech heavyweights such as Apple and Google that alleges that the firms colluded to suppress the salaries of high-skilled workers.
Siddharth Hariharan, a former software engineer at Lucasfilm, filed a suit that states that Adobe, Apple, Google, Intel, Intuit, Lucasfilm, and Pixar conspired in its recruitment process to “ fix and suppress employee compensation, and to impose unlawful restrictions on employee mobility.”
The suit alleges, for example, that these companies violated California anti-trust and unfair competition laws when executives at these firms agreed in various combinations to not actively recruit each other’s employees, to notify each other when making an offer to a partner’s employee, and agreeing to not provide a counteroffer if a current employee took a job with a partner firm.
“My colleagues at Lucasfilm and I applied our skills, knowledge, and creativity to make the company an industry leader,” Hariharan 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 suit follows on a 2010 US Department of Justice lawsuit and subsequent settlements involving all seven Silicon Valley companies that alleged the same wage-fixing schemes described in the class-action litigation filed by Hariharan.
Impact Shorts
More ShortsApple, Adobe, Google, Intel, and Pixar settled the DOJ case in September 2010, and Molly S. Boast, Deputy Assistant Attorney General in the Department of Justice’s Antitrust Division said at the time that “the agreements challenged here restrained competition for affected employees without any pro competitive justification and distorted the competitive process.”
[caption id=“attachment_4365” align=“alignleft” width=“380” caption=“Apple and Google have been accused of suppressing employee compensation. Reuters”]  [/caption]
The second settlement, involving Pixar and Lucasfilm, was finalised in December 2010.
In settling the DOJ lawsuit, the tech-firm defendants were prohibited from maintaining these recruitment agreements, but they did not admit guilt in the process, nor were they required to pay monetary fines.
Chuck Mulloy, an Intel spokesperson, told First Post that the company “did not believe our actions violated the law, nor do we agree with the allegations of the DOJ. We simply settled the matter because it would not harm the company nor would it harm our ability to do business.”
Mulloy added that the recruitment schemes described in the DOJ complain are “not an effective way of recruiting anyway.”
Because the DOJ actions didn’t result in financial compensation for the Silicon Valley workers who may have been affected by these agreements, Hariharan, now the CEO of a gaming company called InEarth, filed a civil suit seeking monetary redress. Joseph Saveri, an attorney with Lieff Cabraser Heimann and Bernstein who is representing Hariharan, estimates that the agreements could have depressed wages by 10 to 15 percent.
“This lawsuit is important because there were a number of employees or potential employees of these companies that ended getting less in compensation, both in terms of wages and other compensation as a result of these agreements,” Saveri told First Post. “There should be competition for these services, and a lack of competition not only affects the persons who are entitled to receive more for their work, but also consumers because the more companies compete for employee services, the better the products they can provide to their customers.”
But defendant companies that responded to First Post inquiries said that the suit is baseless. (Apple, Google, Intuit, and Pixar did not respond to requests for comment; Adobe said it does not comment on pending litigation.)
“The suit filed today is mistaken,” Intel’s Mulloy said. “That we ‘suppressed compensation for employees’ and that there was ‘interconnected web of express agreements to eliminate competition among them for skilled labor’ or that there was a conspiracy-that is mistaken. We are in the process of doing an in-depth analysis of the allegations. We don’t want to trivialise it, but expect us to conduct a vigorous defense.”
A Lucasfilm spokesperson wrote in an email: “The claim is meritless. We have no further comment on the pending litigation.”