We have previously addressed rumblings that the Department of Justice was investigating agreements between companies where they agreed not to contact each other’s employees for hiring purposes.
The companies involved were Adobe, Apple, Google, Intel, Intuit and Pixar. In the competitive impact statement, the DOJ outlined the nature of the agreements. For example, the Google-Intuit agreement provided for the following:
Beginning no later than June 2007, Google and Intuit agreed to prohibit Google from cold calling any Intuit employees. Senior executives at Google and Intel reached this express agreement through direct and explicit communications. The executives actively managed and enforced the agreement through direct communications. The agreement covered all Intuit employees and was not limited by geography, job function, product group, or time period. In furtherance of this agreement, Google listed Intuit among the companies that had special agreements with Google and as part of its “do not call” list. Google policed the agreement to ensure it was followed, including by investigating complaints from Intuit that Google had violated the agreement. On each occasion, Google determined that it had not violated the agreement and informed Intuit.
From the pleadings filed by the Department of Justice, it’s clear these were rather sophisticated agreements. Effectively included were review and complaint procedures in the event of an alleged violation of the non-solicit agreement. These deals were essentially the opposite of broker protocol, which allows stockbrokers to move freely between members of the broker protocol without fear of a lawsuit.
Though employers can certainly enter into non-compete and non-solicitation agreements with their employees as long as they comply with applicable state law, it would appear to be next to impossible for companies to enter into company-company agreements with one another to shut down the movement of their employees.
The proposed final judgments prohibits the companies from entering into these agreements and requires them to disclose certain information to the DOJ, among other things. There were no financial penalties disclosed.