How to screw tech workers and get away with it

If six of the largest tech companies got caught fixing prices, they’d be accused of an illegal restraint of trade and might face huge fines and even jail time under the Sherman Antitrust Act. Simply put, they’d get a serious kick in the ass. So why did eBay this week get a mere slap on the wrist — a light one, at that — for its admitted practice of conspiring with Intuit not to hire each other’s staffers, a trend-setting scheme copied by at least four other tech giants?

Surely, that’s price fixing and restraint of trade. By not poaching, as the practice is called, the co-conspirators held down wages and limited the freedom of workers to bargain as participants in what is supposed to be a free market.

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Adding the proverbial insult to injury is the amazing productivity of workers at those companies. Apple, for example, reaps $2.1 million in revenue from each man and woman who works there; Google gets $1.2 million, and eBay gets $509,000. But every single one of those companies got off lightly in this wage-suppressing anti-poaching conspiracy.

Of course, more was involved in these tech firms’ collusion than holding down salaries. The companies were afraid that employees who defect would take valuable intellectual property with them. That’s a bogus fear as well: Common employment agreements generally assign rights to discoveries made at work to the employer.

What the employees could take with them was their brainpower, which could help their then-employer’s competitors. That was the real reason: Locking employees away from current or future competitors — so much for the libertarian and meritocratic principles we hear so much about in Silicon Valley.

The eBay-Intuit handshake that started the antipoaching collusion

To refresh your memory on the eBay/Intuit collusion that started this whole saga: eBay’s then CEO, Meg Whitman, and Intuit founder Scott Cook (then on eBay’s board of directors) struck a handshake deal back in 2006, agreeing not to poach each other’s employees, according to documents filed in federal and state courts. Other tech giants — Adobe, Apple, Google, and Intel — followed suit.

Word eventually got out, and the federal Department of Justice and the California attorney general investigated. Then they sued.

Under the settlement proposed in May and cleared Tuesday by Judge Edward J. Davila of the U.S. District Court for the Northern District of California, eBay is prevented for five years from entering into or maintaining agreements with other companies that restrain employee recruitment and hiring.

California Attorney General Kamala Harris announced a related settlement in May with eBay, with the company agreeing to pay restitution and civil penalties of a bit less than $3.8 million, including $300,000 for the harm to the state’s economy.

Talk about a slap on the wrist! Last year, eBay’s revenue was a bit more than $16 billion, which works out to $1.8 million an hour — breaking the law cost eBay about two hours of revenue. Has eBay learned its lesson? Probably not, since earlier this year it said, “The policy that prompted this lawsuit was acceptable and legal, and led to no anticompetitive effects in the talent market in which eBay competed.”

A tiny payday for employees It wasn’t only eBay that got off scandalously light for such anticompetitive collusion. In a separate class-action suit against Adobe, Apple, Google, and Intel, the four companies agreed to a collective settlement of $324 million.

That might sound like a reasonable numbers until you do a little math. The class-action suit represented 64,000 workers, which means each would receive the munificent sum of $5,062; subtracting lawyers’ fees shrinks that amount further. Plaintiffs had sought $3 billion in damages in lost wages, which under antitrust laws could have tripled to a $9 billion reward had they won in court — $140,625 each, or about $102,780 after the lawyers’ cut.

I don’t mean to sound obsessed about the numbers, but take a look at how much employees contribute to the top and bottom lines of these companies.

A plaintiff named Michael Devine, who asked the judge to overturn the settlement, made a very apt analogy: “It would be like getting caught shoplifting a $400 iPad, but the resolution would be [paying] a $40 fee to Apple, and keeping the iPad.” Devine created a website to campaign for a better settlement.

Happily, Devine’s voice was heard. Earlier this month Federal District Court Judge Lucy Koh rejected the settlement, saying, “The court finds the total settlement amount falls below the range of reasonableness.”

We’ll see how this turns out.

Companies are people who don’t go to jail Because the U.S. Supreme Court has decided that corporations really are people, you have to wonder when someone is going to get serious about seeing that those “people” actually follow the law and get punished the way you and I would if we break the law.

The truth is that corporations are people only when it suits them to be. That’s not right.

This article, “How to screw tech workers and get away with it,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.