The Justice Department says it has reached a settlement agreement with San Jose-based eBay over a 2012 lawsuit that accused the company of antitrust violations for entering into an agreement with Intuit not to recruit each other’s workers.

The suit against the Internet retailer was one of a series of antitrust actions filed against high-tech and digital entertainment firms that alleged they entered into “no cold call” agreements — essentially, pacts not to “poach” workers from companies that were party to the arrangement. Prior to filing the eBay lawsuit in November 2012, the Justice Department sued Adobe Systems, Apple, Google. Intel, Intuit, Lucasfilm and Pixar.

The department filed settlements with all of those companies, banning the non-competition agreements.

eBay headquarters in San Jose. (Justin Sullivan/Getty Images)
eBay headquarters in San Jose. (Justin Sullivan/Getty Images)

The settlement announced Thursday, which also would resolve a parallel lawsuit by the California Department of Justice, would prohibit eBay from “entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, hiring or otherwise competing for employees.” The company will be required to file annual compliance reports for the next five years.

In a statement, California Attorney General Kamala Harris said eBay has also agreed to pay $3.75 million in restitution and penalties to settle the case.

The DOJ’s press release on the settlement offers this on the history and rationale for the original legal action:

In its lawsuit, the department alleged that senior executives and directors of eBay and Intuit entered into an agreement, beginning no later than 2006, that prevented each firm from recruiting employees from the other and that prohibited eBay from hiring Intuit employees that approached eBay.

In the high technology sector, employees with advanced or specialized skills are highly valued and sought after. Companies often heavily recruit and hire experienced and capable employees of other technology firms, offering significantly better job opportunities or pay. The agreement between eBay and Intuit diminished important competition between the firms to attract highly skilled technical and other employees to the detriment of affected employees who had less access to better job opportunities and higher pay.

“eBay’s agreement with Intuit served no purpose but to limit competition between the two firms for employees, distorting the labor market and causing employees to lose opportunities for better jobs and higher pay,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed settlement resolves the department’s antitrust concerns and ensures that eBay will not engage in similar conduct in the future.”

And from Attorney General Harris’s statement, details on the the settlement money:

eBay will pay $3.5 million into a settlement fund, which will include $300,000 to the state for the harm the anticompetitive conduct caused to the state’s economy, which is the first time a state antitrust settlement has explicitly recovered additional funds for general harm to the economy.

A portion of the settlement fund will be used to pay restitution to individuals employed in California by eBay or Intuit since 2005. Restitution payments will be made to three distinct pools of current and former employees. The first pool of approximately forty individuals who were employed by Intuit and considered for but not offered a position at eBay, will receive between $5,000 and $10,000 each. The second pool of approximately 950 individuals who were employed by Intuit and applied for but were not offered a position at eBay, will receive between $1,000 and $1,500 each. The third pool includes current and former employees who fall within the terms of the settlement but are not included in the first or second pool. While these individuals did not apply for jobs at the other company, they may have been indirectly affected by the anticompetitive conduct and will receive a maximum payment of $150.

In addition, eBay will pay $250,000 in civil penalties.

 

Just a week ago today, another anti-poaching settlement was reached with Adobe, Intel, Apple and Google in a class-action lawsuit brought by more than 64,000 tech workers.

Author

Dan Brekke

Dan Brekke (Twitter: @danbrekke) has worked in media ever since Nixon's first term, when newspapers were still using hot type. He had moved on to online news by the time Bill Clinton met Monica Lewinsky. He's been at KQED since 2007, is an enthusiastic practitioner of radio and online journalism and will talk to you about absolutely anything. Reach Dan Brekke at dbrekke@kqed.org.

Sponsored by

Become a KQED sponsor