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The main exception applies to the unionized sector, she says, where employees can join together to bargain as one group, and employers can come together to bargain as one group (an employers’ federation).
Exceptions exist in some other settings where no-hire agreements are common.
“In the latter case, it results in customers paying higher prices because of the lack of competition, and in the former case it results in workers receiving lower wages because of the lack of competition.” He explains how no-poaching agreements can conflict with the law.
“If one were to substitute ‘customer’ for ‘employee’ in the communications between Steve Jobs and [Google chairman] Eric Schmidt, such communications [would be] the basis for many convictions under Section 1 of the Sherman Act,” he says.
Joseph Harrington, Wharton professor of business economics and public policy, describes a no poaching agreement as “an unreasonable restraint of trade” and thus a violation of Section 1 of the Sherman Antitrust Act of 1890.
“In terms of suppressing competition, companies agreeing not to compete for each other’s employees is the same as companies agreeing not to compete for each other’s customers,” says Harrington.
The class action lawsuit accused the four Silicon Valley companies of conspiring, between 20, to avoid hiring each other’s employees – a practice that the lawsuit says resulted in lower salaries for the affected individuals.
About 64,000 employees of those companies sought billion in damages, which would have risen to billion under antitrust law.
Indeed, the companies have been mostly circumspect about the settlement.
“Actually, we should be less worried about the big firms like Apple and Google [and more worried] about what it means to small startup companies,” Barankay says.
“These no-poaching and non-competes shift the balance of power towards large companies that can prevent newcomers from bringing ideas to the market” because talented engineers and designers are tied up in the large companies.
Bidwell says much of his research shows that mobility isn’t always a good thing.
“It takes a long time to learn the culture and build the relationships [that allow us] to be effective in our current organization.