United States: Federal Court Approves $415 Million Settlement Of Employee Antitrust Claims Against California Technology Employers

Executive Summary:   On September 2, 2015, a federal trial court in California approved a $415 million settlement of an antitrust class action filed against a number of Silicon Valley technology employers, including Apple Inc. and Google, among others. The settlement resolves a class action lawsuit filed by software engineers in May 2011, which claimed that the companies had conspired to repress the engineers' wages and job opportunities by sharing salary and benefit information, agreeing to pay caps among themselves, and agreeing not to hire employees away from competitors. In re: High-Tech Employee Antitrust Litigation, Case No. 5:11-cv-02509 (N.D. Cal. 2015).

This approval added an additional $90 million to an earlier settlement proposal of $325 million that district court Judge Lucy H. Koh rejected in August 2014 as being insufficient. The class originally consisted of more than 64,000 employees. Class members filed 11 objections to the settlement, and 56 members opted out of the class. The objections ranged from objections to the size of the settlement amount to challenges to the allocation plan that was submitted to requests that the lawsuit proceed to trial.

Background

The original antitrust complaints alleged that the companies' behavior resulted in a 10 to 15 percent depression of the class members' salaries. Among other things, the complaints alleged that the competitor companies violated the antitrust laws by agreeing among themselves to provide each other with notice whenever one of the companies offered a job to another of the companies' employees. The complaints also claimed the companies agreed to share information on the software engineers' salaries and benefits and agreed to cap pay packages to avoid bidding wars among the companies for applicants. In addition the companies were said to have agreed to refrain from recruiting employees from among other competitor companies.

The allegations followed an investigation in 2009-2010 by the U.S. Department of Justice Antitrust Division into Silicon Valley hiring and recruitment practices which led to the DOJ filing a complaint September 2010 that ultimately resulted in a stipulated final judgement. In re High-Tech Emp. Litig., 856 F. Supp. 2d 1103 (N.D. Cal. 2012). The software engineers then filed this class action in May 2011. The complaint sought class certification for all salaried employees or all technical employees, and the narrower class of technical employees was later certified.

Million Dollar Settlements

In July 2013 the engineers settled with some of the companies for $20 million, and judgment was entered in June 2014. After discussions among the remaining parties and the court's rejection of an initial settlement amount, a motion was filed in January 2015 to approve the settlement figure of $415 million. The court granted preliminary approval in March 2015 and final approval on September 2, 2015. The settlement included a request for an attorneys' fee award of $81.1 million or 19.5 percent of the settlement fund.

Employers' Bottom Line:  Competitors who directly share with one another the details of salaried employees' pay and benefits are subject to the risks of potential antitrust claims. Courts may infer from these behaviors that employers have entered into agreements limiting normal market outcomes for hiring and compensating employees. Federal Trade Commission guidelines and antitrust case law point out the difficulties competitor companies have in overcoming the implications of these behaviors when corporate managers, including HR and benefits personnel, interact directly with their counterparts and receive requests from a competitor for information about salaried employees.

Sound compliance programs in company and trade association policies will consider and address the needs for training and following "Safe Harbor" practices to avoid the potential for costly litigation involving either government regulatory bodies, private lawsuits, or both. 

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