The Justice Department yesterday settled a lawsuit against eBay for entering into anti-competitive agreements with Intuit for the purpose of restraining employee recruitment and hiring.

eBay will also pay $3.75 million to cover civil penalties and restitution payments in a separate settlement with the California Attorney General's Office.

The Justice Department takes a dim view of these agreements since many of them amount to collusion and manipulation of labor markets. “These so-called ‘do not poach' or anti-solicitation agreements are per se unlawful, and the Antitrust Division takes them very seriously,” Assistant Attorney General Bill Baer said in a statement announcing the settlement. 

The Justice Department's Antitrust Division filed the proposed settlement in the U.S. District Court for the Northern District of California on May 1.

The California Attorney General's Office filed a related lawsuit against eBay for similar allegations, which eBay also settled May 1. As part of that settlement, eBay agreed to pay $3.75 million to cover civil penalties and restitution payments to those who worked at eBay and Intuit. 

According to the allegations in both cases, executives of eBay and Intuit, including eBay's former CEO Meg Whitman and Intuit's founder and executive committee chair Scott Cook, entered into an agreement that prevented the companies from recruiting employees from each other and, for a time, prevented eBay from hiring any Intuit employees. “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 Baer.

The proposed settlement with the Justice Department prohibits eBay from entering into or maintaining anti-competitive agreements relating to employee hiring and retention for five years. The settlement further prohibits eBay from entering into an anti-competitive agreement “in basically any way, shape, or form that prevents a person from soliciting, cold calling, recruiting, hiring, or otherwise competing for employees,” said Baer.

Similar Cases

As Compliance Week previously reported, several other Silicon Valley high-tech giants, including Apple, Google, and Intel currently are facing a class-action lawsuit in the U.S. District Court for the Northern District of California over allegations that they entered into bilateral no-poaching agreements with one another on several occasions between 2005 and 2009, where they allegedly conspired not to recruit each other's employees.

Pixar, Lucasfilm, and Intuit have already entered into settlements to resolve the lawsuit, agreeing to pay a total of $20 million. The remaining corporate defendants Apple, Google, Intel, and Adobe have yet to settle and some estimates of potential claims climb into the billions of dollars.

The case, In re High-Tech Employee Antitrust Litigation, was filed by a group of Silicon Valley software and hardware engineers, who argue that the no-poaching agreements violate Section 1 of the Sherman Act, which prohibits the restraint of trade. The argument is that any agreement that restricts competition in the market constitutes a monopolistic act that has an effect on interstate commerce.