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A Skeptical Engineer
Something Rotten in the Valley of Silicon

Something Rotten in the Valley of Silicon

The gizmos and gadgets streaming out of Silicon Valley seem so cool that the companies and personalities based there have become cool by association. But all that sweet high-tech stuff comes from bottom-line-oriented business run by hard-headed business folks, and they don’t always stay on the right side of the common decency or the law. If you need a reminder of those facts, a recent federal court decision provides a wake-up call.

In short, several Silicon Valley giants, including Apple, Adobe, Google, Intel, Intuit, Lucas Film, and Pixar, were accused of conspiring to keep down wages for tech workers. The companies agreed to a no-poaching agreement in which no company would try to lure employees away from other companies with better compensation or better positions. Steve Jobs, the Apple CEO who was practically canonized after his premature death, seems to have been the ringleader.

Once the cat was out of the bag and facts were made public, lawyers formed a class-action suit that included 64,000 tech workers, which included a lot of engineers and designers. At least three of the companies – Intuit, Lucas Films, and Pixar – saw the error of their ways (or the writing on the wall) and settled with about 150 ticked-off plaintiffs. The plaintiffs each got $136,054. I don’t know what their lawyers pocketed.

The rest of the plaintiffs and companies went to court where a $400 million settlement between the accused companies and class-action lawyers was rejected by a particularly wise federal judge (Judge Lucy Koh). She thought the terms of the settlement were unfair even if the companies and class-action lawyers felt they were just dandy. It would have given about $325 million to the workers, or $3,750 each, and $75 million to the lawyers. She pointed to the previous settlement made with the 150 workers and the fact that since that first settlement, the evidence of wage suppression has been piling higher and become even more compelling. The court also accepted expert testimony that total damages to the “entrapped” tech workers could be $3 billion; kick in punitive damages and that could climb to $9 billion.

It’s always been a given that if you didn’t like your job, either because of low wages, long hours, or whatever, you could quit and get a new one. Or if someone approaches you with a job offer that really excites you, you can take it, making sure to give your current employer the traditional two-week notice or whatever is contractually required. So what these companies did – keeping workers trapped in lower paying positions and unable to find their true value in an open marketplace, and doing it in secrecy – is rotten. And unfair. And un-American. And if they get socked for $9 billion, so be it.

For more details on this case, check out Chris W. Street’s coverage on the Web.

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