Cold calling is a method of recruitment whereby direct contact is made (either orally, in writing, electronically, or by telephone) with an employee who has not otherwise applied for a job. This method has proven to be much more effective than other forms of recruitment.
Upon receiving a cold call, employees are given access to employee benefit information from rival companies. They can then use this information to negotiate a higher pay rate with their current company, or they can choose to move to the new company. They can also pass this information on to their colleagues who can then use it to negotiate a higher salary for themselves, even if they don’t receive a cold call. Companies generally provide employees with a higher base pay in order to provide an incentive to stay when cold calls are a possibility.
A lawsuit against Apple, Google, Pixar, Intel, Intuit, Lucasfilm, and Adobe alleges that the companies formed a pact not to cold call each other’s employees. The lawsuit was filed by four former employees, two who worked for Adobe during the relevant time period, one for Intel, and one for Intuit. The lawsuit is seeking class action certification with the class defined as “everyone employed by Defendants in the US on a salaried basis during the period from January 1, 2005 through January 1, 2010”.
According to the lawsuit, the alleged conspiracy began in 2005 between Lucasfilm and Pixar (at the time, Steve Jobs controlled Pixar, although Apple had not yet bought Lucasfilm) and consisted of three parts:
1) each company allegedly agreed not to cold call the other company’s
2) each company allegedly agreed to notify the other if making an offer to an
employee of the other company if that employee applied for a job without having
received a cold call, and
3) each company allegedly agreed that if either company made an offer to such
an employee of the other company, neither company would counteroffer above
the initial offer.
These alleged agreements were not restricted by geography, job function,
product group, or time period.
The alleged agreement grew until it included Apple, Google, Adobe, Intel and, finally,
Intuit. None of the employees of any of these companies were ever aware of this alleged agreement. The plaintiffs allege that the agreement kept their salaries at an artificially low level and they are seeking three times the damages caused by the companies’ agreements, the costs of bringing the suit, and attorneys’ fees.
The Antitrust Division of the US Department of Justice (DOJ) conducted an investigation into the employment practices of the defendants beginning in 2009. In 2010, the DOJ filed two complaints (one against Adobe, Apple, Google, Intel, Intuit, and Pixar, and the other against Lucasfilm and Pixar). In both complaints, the DOJ proposed final judgments in which the seven companies agreed that the DOJ’s complaints “state a claim upon which relief may be granted” under federal antitrust law.
Since then, technology workers have brought civil lawsuits against the tech companies, which could expose further embarrassing communications between top executives in the firms.
However, US District Judge Lucy Koh has refused to certify the class of plaintiffs. She says that the pact affected workers in too many different ways to allow them to be all lumped together. However, she also said that the plaintiffs’ lawyers can present additional evidence to convince her that a class-action lawsuit has merit. Certification of a class-action would grant the plaintiffs much greater leverage when it comes to claiming financial settlements from the companies.
The companies deny any wrongdoing, although they have agreed not to enter into any similar agreements.