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Justice Department Investigates Technology Companies' Hiring Practices

Are there Agreements Not To Poach Each Other's Top Talent?

1 min read

Last week, the Washington Post reported that the US Department of Justice has begun an antitrust investigation into the hiring of practices of major technology and biotech companies including Google, Apple, Microsoft and Genentech. The reason for the investigation is to discover whether the informally followed "gentlemen's agreement" among tech companies not to poach one another's top talent has turned into active collusion between some companies.

According to a story in the San Jose Mercury News, a former Google recruiter claims that the company kept a "do not touch" list of top talent as a courtesy to other companies. A former recruiter for Yahoo, on the other hand, has said in the same story that it had no such restrictions and actively recruited personnel from other tech companies.

As noted in this story by the New York Times, "a group of oil geologists and petroleum engineers who sued Exxon and other oil companies for colluding in hiring decisions and thus suppressed wages" had their complaint upheld as recently as 2001, so it isn't like this practice is especially new or novel.

The Mercury News story notes that "California has especially tough rules barring companies from restricting their employees' job hunting. Many companies across the country require employees to sign so-called noncompete agreements, in which the worker agrees not to be hired by a competitor within a certain period of time." However, according to at least one labor lawyer, California law generally regards such noncompete agreements as unenforceable.

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