Silicon Valley workers may pursue collusion case as group

http://www.reuters.com/article/2014/01/15/siliconvalley-collusion-lawsuit-idUSL2N0KP02P20140115

by ForHackernews • 13 years ago

95 89 13 years ago

reuters.com

lowglow2• 13 years ago

Literally so much collusion in the valley it's insane. Maybe I should write an article about it.

spamizbad• 13 years ago

Please do.

blazespin5• 13 years ago

What collusion are you talking about?

dclowd9901• 13 years ago

Might want to brush up on your use of "literally" first.

lowglow2• 13 years ago

Words change their meaning over time. I'm afraid this is something you'll just have to learn to accept.

rrreese• 13 years ago

Lets consult the Oxford English Dictionary: http://www.oed.com/view/Entry/109061?redirectedFrom=literall...

"c. colloq. Used to indicate that some (freq. conventional) metaphorical or hyperbolical expression is to be taken in the strongest admissible sense: ‘virtually, as good as’; (also) ‘completely, utterly, absolutely’. Now one of the most common uses, although often considered irregular in standard English since it reverses the original sense of literally (‘not figuratively or metaphorically’)."

Of note the use by Twain: "1876 ‘M. Twain’ Adventures Tom Sawyer ii. 20 And when the middle of the afternoon came, from being a poor poverty-stricken boy in the morning, Tom was literally rolling in wealth."

You may not like this situation but it is way too late to complain about it.

dmazin2• 13 years ago

That's interesting. A company may see it as only fair not to poach, but in the eyes of employees it's (rightly) collusion.

On that note, "Former Apple CEO Steve Jobs threatened to hit Palm with patent litigation if the company did not stop poaching valuable employees"[1] is not ethically defensible.

[1] http://arstechnica.com/apple/2013/01/angry-over-employee-poa...

sdoowpilihp• 13 years ago

It wasn't about being fair on the companies part; not poaching each others employees was a form of cost control.

dmazin2• 13 years ago

What I'm saying is that while it may seem wrong to poach employees, employers have a greater duty to the workforce than to other companies, ethically.

blazespin5• 13 years ago

This collusion was frankly beyond obscene and should be totally illegal. Like non compete clauses, they're put in place so corporations are basically given a way to work together to oppress their employees. It's just as bad as Unions, but for corporations.

crazygringo2• 13 years ago

Not that I'm disagreeing with this outcome at all...

But if agreeing not to poach is collusion and conspiracy...

Then how is it that it's legal for workers to form unions and strike? Isn't that just as much "collusion and conspiracy" from the other side?

I mean heck, consumers organizing to boycott a product is a kind of "collusion" and "conspiracy" as well that is just as arguably "anti-market".

Is there anyone who can explain how the law differentiates between them? I have zero legal background/knowledge of these things...

Edit: To be clear, I think unions can be great things, and think the anti-poaching agreements are bad... I'm just trying to figure out a way to reconcile these in my mind! :)

zasz• 13 years ago

IANAL, but unions are highly visible, while this "agreement not to poach" was not.

blazespin5• 13 years ago

Also, none of these tech workers unionized. Though I guess this group action is a sort of union.

oinksoft• 13 years ago

In the US at least, anti-trust laws seek to limit business practices considered anti-competitive. Sure, a "union" could seek to reduce competition/harm businesses, and that is a common accusation, but similar laws for unions are mostly a thing of a past, legacies of a time when state militias did combat with those despicable striking coal miners.

Do you believe that businesses should have the same legal status as individuals? There's been a tiff over that for the last decade or so.

redwood2• 13 years ago

I'm no expert but some thoughts: That's an interesting point: could people be accused of anti-trust violations by agreeing to collude and not work under certain circumstances?

The difference boils down to what the purpose of laws are. Ultimately they exist to sustain a reasonably egalitarian free society. Obviously there are times and specific situations where we deviate more or less from the "ideal" society but the law shepherds us back toward an agreed-upon path.

Basically the root of antitrust law is that concentration of power is anti-democratic and therefore must be controlled. In a situation of people colluding around work standards, there is a parallel to some extent but there isn't a clear power-player who emerges (except for the "Union" itself but that's made up of all the employees in a different way than the corporation is owned by its owners because individuals in a union are all essentially equally important to the union's strength, where in corporate ownership it's very clear that some individuals wield significantly (orders of magnitude) more power through wealth and control.

http://www.jstor.org/discover/10.2307/1239985?uid=3739560&ui...

zedshaw2• 13 years ago

Yes, if you believe that you can reduce any use of a word down to its most abstract concept giving you the ability to equate anything to anything else. By those standards collusion is also a tomato, a pair of shoes, and my left ear. Very Zen.

But, given nobody else thinks this way, then no, unions are not a conspiracy. A conspiracy is pretty much defined as such when everyone involved constantly tells each other "don't tell anyone" which is what these jackasses did (go read the emails). Unions are very public about going on strike and have big votes on it, thus not a conspiracy. Same with consumers organizing a strike, or just about everything you came up with.

Collusion is also not bad unless it's illegal, and what we've decided in the US is that gigantic billion dollar companies are not allowed to get together and screw over poor work slobs who make maybe $100k/year with their collective MegaCorp trillion dollar might. In fact, any decent human being would be enraged at a giant corporation using its power to smash a little guy to make a few thousand more per employee a year.

thaumasiotes2• 13 years ago

There are many, many problems here.

Collusion is also not bad unless it's illegal

Did it ever occur to you that laws might be passed despite those same laws not being beneficial? In your model of the world, where legal actions are all, by definition, good, how would legislators decide whether or not to enact a prospective law? If we repealed all our antitrust legislation, can I assume you would agree that employer collusion to hold down wages used to be bad, but was now good?

no, unions are not a conspiracy. A conspiracy is pretty much defined as such when everyone involved constantly tells each other "don't tell anyone"

I have to agree with the bare semantics here, but... who's alleging that the harm from a bunch of companies secretly agreeing to hold down wages comes, entirely and only, from the fact that the agreement is secret? They do it in secret because it's illegal, and your parent is wondering why employees are legally allowed to do openly what employers must do in secret. Why is there supposed to be a difference? Is there a justification for punishing the companies, other than the fact that their conduct is illegal?

Nothing can be bad because it's illegal; belief following that reasoning is religious, not valid.

yetanotherphd6• 13 years ago

You have misunderstood the analogy.

The issue is not whether the collusion is public or private, and it is also not whether it benefits the rich or the poor.

The issue is that in general it is illegal to reduce competition by forming a cartel. People to it privately because it is illegal. The one exception for this is forming a cartel of sellers of labor, i.e. a union. Note that, if it were not a labor union, a cartel would be illegal even if it was benefiting poor people at the expense or big corporations.

A much better reason for allowing labor unions, is that unless they use physical force (which of course they do, all the time, but I am speaking theoretically here), they don't really create that much market power. People can always choose to work during a strike (again, assuming the union doesn't physically stop them, which is in theory illegal). If unions don't create market power, what is the point of them? I think they can be useful to help management to stick to long-term commitments they make to workers, and to provide an alternate way for workers to be represented in the company.

Xdes• 13 years ago

But, given nobody else thinks this way, then no, unions are not a conspiracy.

Historically unions were conspiracies until the late 1800s.

pron2• 13 years ago

The reason is that the law attempts to balance power; when there is an imbalance of power, it helps the weaker side. A workers union in itself does not exploit employers. Its purpose is to force a fair distribution of wealth. A collusion of businesses is different, as its goal is to force an unfair distribution of wealth, as workers generally have fewer options than corporations. It's much easier for a corporation to find workers elsewhere than for a worker to move, hence this practice exploits workers' limited choice, and the law tries to defend against this kind of exploitation.

blazespin5• 13 years ago

"A workers union in itself does not exploit employers." No, pretty much all unions exploit workers via forced due paying. Unions sucks in the same way corporations colluding suck.

richardfontana• 13 years ago

The antitrust laws in the US were revised to largely carve out activities of labor unions. See: http://www.law.cornell.edu/uscode/text/15/17

rahimnathwani2• 13 years ago

It's about the balance of negotiation power between the buyers and sellers in the labour market. Once jobs became standardised, and employees easier to replace, individuals had/have little/no negotiating power, so their response to low pay and poor conditions is 'suck it up'.

Unions aim to redress that imbalance, and there are specific laws in many countries detailing what they can/cannot do.

IANAL but AFAIK there are fewer and less strong cases where companies can legally collude in most jurisdictions.

A couple of personal thoughts:

- The impact of unions is different in different situations. It's easy for us to pick and choose examples based on pre-existing biases, but the details are more nuanced.

- People often think of unions as being for low-skilled workers, or those where the choice of employers is limited (e.g. teachers in the UK). However, many professional guilds (like national doctors' associations) also provide many of the same functions (lobbying, collective bargaining, coordination of industrial actions, ...).

blazespin5• 13 years ago

The difference is individually, consumers have no power and neither do workers. Which is why unions form. That being said, unions suck as well.

raganwald3• 13 years ago

In theory, at least, the reconciliation is to side with the little guy. When there's a massive imbalance of power, there's an idea that you will be more restrictive of the powerful side.

The theory is that this is in the public's best interests.

So, in theory, if you have two giant companies that control 95% of the distribution of widgets, you might decide that they cannot merge into one entity. But if widgets are made by a bunch of tiny independents and sold to those two distributors, you might allow the independents to form a co-operative association.

In practice, lawyers and lobbyists will say and do anything to get an advantage for their clients. But that's the theory, and that's why it's generally easier to form a union than it is to form a cartel.

crazygringo2• 13 years ago

That's a great explanation, in theory and in practice. :)

I find it interesting that this would justify a union that represented 1000's of workers, working in just 1 or 2 companies.

But that it would not justify a kind of hypothetical 'union of CEO's' of 100's of workers, working in 100's of companies.

Which makes sense, of course.

yummyfajitas5• 13 years ago

How do you determine who is the "little guy"?

Is there some arbitrary pre-specified list/heirarchy of little guys that must be taken as a first principle, or is there an underlying principle determining who is the little guy?

yetanotherphd6• 13 years ago

Apart from the obvious political justifications (people want the union vote) there are some sound reasons why unions are different from cartels like the employers in the article are alleged to have formed.

A cartel is several companies colluding to raise prices above/below the market price.

A labor union might be though of in the same way, but in practice is is very hard for a union to really control the supply of labor, because it is made up of thousands of people. It is only when they are tacitly allowed to use force/violence that unions can effectively prevent strike-breakers.

So given how ineffective they are at permanently raising wages (perhaps they raise wages a bit, but not nearly as much as if they had a true monopoly), unions should probably be allowed since if people choose to join them, they must provide some other benefits, such as representing individual workers with grievances, etc.

pyre2• 13 years ago

One thing that you're also missing here is that (IIRC) employees of one of the colluding companies that applied for a job at another colluding company would be 'reported' and some may have been fired for shopping around for a job elsewhere.

(E.g.) A Google employee sends his/her resume to Apple, then Apple tells Google that said employee is looking for work elsewhere.

mullingitover4• 13 years ago

Then how is it that it's legal for workers to form unions and strike? Isn't that just as much "collusion and conspiracy" from the other side?

Unions are a good thing for civilization, so much so that forming a union the very first purpose that is stated in the list of reasons for writing the Constitution.

We the People of the United States, in Order to form a more perfect Union...

pmorici• 13 years ago

I think it's kind of funny all the responses you your legitimate question are essentially people presenting their political opinions. There is a factual answer to your question though. In the early 1900's people tried to argue exactly that that unions were an illegal conspiracy under the Sherman Antitrust Act. This interpretation was against popular opinion at the time and in 1914 under the Clayton Antitrust Act the legality of organized labor was clarified making it specially legal. The short answer to your question as to why Unions are ok but collusion between companies is not is because there is an exception in the Antitrust laws.

http://en.wikipedia.org/wiki/United_States_labor_law#Workpla...

rahimnathwani2• 13 years ago

Several earlier answers (e.g. pron's) _do_ refer to the legal structure as to why unions can exist, without citing the specific act.

It's totally fair that they also (i) discuss why the law may have to come to be and (ii) how they think/feel about it.

lmkg• 13 years ago

1) Secrecy. Both individuals and companies are allowed to openly band together for the purposes of bargaining power. It happens all the time with standards bodies, lobbying organizations, industry consortia, patent-sharing arrangements, etc. Doing so in secret is usually seen as market manipulation. One of the requirements for a market to be 'free' is equal access to information, which secret agreements prohibit.

2) Power imbalance. Others have addressed this already, so I'll let it lie.

3) This agreement in particular was an attempt to create and abuse a monopsony position, which is in itself illegal. Many markets are regulated in order to ensure competition, by e.g. blocking mergers. Secret negotiations are often an attempt to bypass pro-competition regulations, by having two entities act in concert while pretending to be independent. In short, ends matter. Collusion to commit a crime is viewed differently than collusion to ask for a raise or collusion to not by a product.

squirejons• 13 years ago

youth thinks they are invulnerable.

As you grow older, you realize what the world really is and how vulnerable we really are.

eli_gottlieb• 13 years ago

You ever heard of union-busting? I mean, since when did tech workers form unions without being fired en masse?

rayiner• 13 years ago

Unions have special carve outs in the antitrust laws. Besides that, colluding to limit labor supply isn't necessarily legal either. E.g. The DOJ has threatened the ABA with antitrust enforcement if they use the law school accreditation process to artificially limit the supply of lawyers. This is labor side collusion, but is still considered illegal because it doesn't fall within union carve outs.

dredmorbius• 13 years ago

How is it that it's legal for workers to form unions and strike? Isn't that just as much "collusion and conspiracy" from the other side?

Employers have a natural organizational advantage, as well as advantages of capital and resources. Given that virtually any workplace has a 1:n relationship with its employees, the bargaining advantage is with the employer. Within a labor market as a whole, a small number of companies may affect a huge number of workers (the case lists a handful of firms and 60,000 or more employees).

This was recognized by Adam Smith in The Wealth of Nations:

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily: and the law, besides, authorises, or at least does not prohibit, their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it. In all such disputes, the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks, which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year, without employment. In the long run, the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and, one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy till the moment of execution; and when the workmen yield, as they sometimes do without resistance, though severely felt by them, they are never heard of by other people.

And on for a number of paragraphs.

http://www.gutenberg.org/files/3300/3300-h/3300-h.htm#link2H...

Chapters VII and X of book 1 discuss labour, wages, and various differentiators among them. They're impressively comprehensive and informed, vastly more liberal than you might have been lead to believe of Smith (he really is quite the liberal philosopher), and still highly applicable today. I strongly recommend reading both sections, and more of Smith if at all possible.

redwood2• 13 years ago

The problem with laws like this is they're very difficult to prove because you can create fairly arbitrary criteria for what you want in an employee and claim that one of those things you want is for them not to have been significantly molded by a different large bureaucratic entity with its own culture and processes.

It's trivial to prove this is going on, but what I mean is: difficult to reach the legal burden of proof of collusion.

Also ultimately a law suit like this will send $$$ -> lawyers more than anyone else.

mikeyouse• 13 years ago

The problem with laws like this is they're very difficult to prove

Not when the DOJ has subpoena power.

After a Google recruiter reached out to an Apple engineer, Steve Jobs in an email to Eric Schmidt:

    "I would be very pleased if your recruiting department would
    stop doing this,"

Schmidt, forwarding that email to his team:

    "Can you get this stopped and let me know why this is happening?"

Google's Staffing Director:

    "[The recruiter who contacted the Apple Employee] will be terminated within
    the hour."

    "Please extend my apologies as appropriate to Steve Jobs."

http://www.reuters.com/article/2012/01/27/us-apple-lawsuit-i...

smtddr2• 13 years ago

Hmm... so while we have the whole gentrification thing going on, those on the outside of tech are watching us complain that maybe we don't get paid enough. Imagine what the outside-of-tech people think when reading this article. The recession and/or effects of it isn't over for a lot of them. If there was an article about bank or oil company execs complaining that they don't get enough money we'd probably all be exploding with rage.

Just saying....

yetanotherphd6• 13 years ago

Only people who don't understand that wages come from the value a person produces. Lawyers, doctors, professional athletes, also get high wages and are entitled to them. If you want to adjust income inequality you have to do it across the board, through taxation, not by shaming individual industries.

We get paid so much because we produce that much value. But if these allegations are true, we aren't getting paid enough.

pravda4• 13 years ago

Interesting examples. Doctors are part of a cartel. Also lawyers. Although I don't think all lawyers get high wages.

Professional athletes are unionized. They would be earning much less money if they weren't.

smtddr2• 13 years ago

So... what do you think about the salaries of teachers in public schools?

Also, I bet bank & oil execs believe they make the world-go-round and add a lot of value too. After all, banks & oil touches pretty much all our lives as much as computers do, right?

rodgerd• 13 years ago

If the person reading this is enraged that the hyper-rich aren't empowered to fuck programmers down to minimum-wage serfs, then they're part of the problem.

ps4fanboy• 13 years ago

It is a shame Steve Jobs isnt alive to answer for his part in this.

vinceguidry• 13 years ago

I'd prefer him alive too, so he can keep making amazing products.

ChuckMcM• 13 years ago

Its funny for me because on the start-up side of things it feels like Apple, Google, and Facebook are pushing up wages by offering up huge salaries to entice everyone to go there.

randomdata• 13 years ago

That's what is supposed to happen. Supply and demand.

arikrak2• 13 years ago

They didn't say they wouldn't hire each other's employees, just they wouldn't actively recruit top talent from each other. I don't see what's wrong with that. Top employees can still apply on their own.

mullingitover4• 13 years ago

They didn't say they wouldn't hire each other's employees, just they wouldn't actively recruit top talent from each other.

You've just described collusion. They colluded to prevent the wages of their top talent from being boosted by the normal process of competition in the labor market. Sure it's not like they stole money directly out of their star employees' pockets, but in the end the effect was the same.

arikrak2• 13 years ago

One motive for it was so they could work together on projects without worrying about the employees getting poached. It doesn't seem like such a clear-cut wrong.

employee• 13 years ago

(google employee here)

One thing I have always wondered is if the raises Google employees received in 2011 were a result of the illegal collusion being uncovered and therefore no longer depressing salaries. The timing seems about right.

For reference: http://www.businessinsider.com/google-bonus-and-raise-2010-1...

(It was much more than 10% by the way, and by far the biggest raise I've ever received in my career)

It's beyond dispute that the raises were given for competitive reasons. (No, we didn't all get a raise because we were doing such a great job.) There was an uptick in Googlers leaving.

I suppose some of it had to do with Facebook, which was NOT part of the collusion. But I wonder how related the two events are, and if this issue will come up in a future class action lawsuit.

It's a pretty unprecedented event to give all employees at an enormous company such a big raise. A sudden shift in the job market caused by this defunct agreement could explain it.

puppetmaster3• 13 years ago

The software engineers salaries are way to low and artificially so, due to lack of free working market.

Compare to how much you pay for a lawyer per hour. And lawyer do not have to train on the this years tech over and over. And they don't have to think hard for full day.

mullingitover4• 13 years ago

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." - Adam Smith

miguelindurain• 13 years ago

Do any of those workers still work for those companies, or did they have to quit before suing ?

Silicon Valley workers may pursue collusion case as group

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