Ironically, the importance and tight demand for high-tech human resources may have lead Silicon Valley companies to engage in practices that actually reduced their wages.
A class action wage theft lawsuit is implicating numerous tech companies in Silicon Valley for taking organized actions to suppress wages. In one instance, legal documents reveal that Steve Jobs threatened the CEO of Palm Inc. with legal harassment in an attempt to make a potentially illegal wage suppression deal. At issue, Mr. Jobs was annoyed with Edward Collagan of Palm for poaching workers from Apple and attempted to strike a deal where the two companies would agree not to hire each others employees. It’s an agreement that amounts to wage suppression since employers can’t use higher wages to hire employees away from another company.
Palm CEO, Edward Collagan, was one of the few prominent Silicon Valley heads to stand up for workers and against a possible wage suppression web that included high-profile tech companies, saying to Mr. Jobs:
“[Y]our proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal.
“…I can’t deny people who elect to pursue their livelihood at Palm the right to do so simply because they now work for Apple, and I wouldn’t want you to do that to current Palm employees.”
In turn, Jobs threatened to file costly, protracted lawsuits against Palm in retaliation, saying:
“This is not satisfactory to Apple…We must do whatever we can to stop this. I’m sure you realize the asymmetry in the financial resources of our respective companies when you say: ‘We will both just end up paying a lot of lawyers a lot of money.’… My advice is to take a look at our patent portfolio before you make a final decision…”
Basically, Jobs proposed an agreement detrimental to workers, Collagan said “No,” Jobs threatened to engage Collagan in costly legal battles in retaliation and Collagan said “shove it.”
This is part of a much broader issue as revealed by the wage theft lawsuit. Mr. Jobs may have also engaged in a secret pact with Google CEO Eric Schmidt to abstain from recruiting each other’s employees. Yes, it’s not just Steve Jobs. Two of America’s most beloved tech companies may have engaged in business practices that directly contributed to wage suppression in the technology industry. Also implicated in the wage suppression lawsuit are Intel, Adobe, Intuit and Pixar.
These types of agreements became so pervasive during a period of tight demand for high-tech engineers that the U.S. Department of Justice began an antitrust investigation in 2010. That investigation formed the basis of a class action lawsuit on behalf of more than 100,000 Silicon Valley employees who claim wage suppression agreements robbed them of about $9 billion since 2000.
America idolizes many of these businesses and reveres Steve Jobs as one of our nation’s visionaries and heroes. As a society we seem to idolize much of the toughness and shrewd business dealings, skirting the law at times. And they’ve definitely been powerhouses that have driven our society and our fortunes. We love those folks!
On the other hand, the fierce protectiveness each of these businesses has displayed for its high-tech humans resources shows an important story beyond the Individual Businessperson Hero narrative. It shows these businesses depend deeply, deeply on the skills and work and vision of the employees. And rather than rewarding these critical hands of an American technological revolution, these businesses may have in fact have taken money from them because of their importance.
That’s irony. It’s also, possibly, illegal.