EBay Settles Allegations on Recruiting, Hiring Practices--Update

By Dow Jones Business News, 

By Brent Kendall and Greg Bensinger

EBay Inc. on Thursday agreed to settle allegations by federal and state officials that the company violated antitrust law by agreeing with Intuit Inc. to refrain from recruiting each other's employees.

The company's deal with the Justice Department, filed in a San Jose, Calif., federal court, bars the Internet retailer from maintaining or entering into new agreements with other companies to restrict recruitment and hiring.

Separately, eBay agreed to pay $3.75 million in restitution and penalties in a settlement with California Attorney General Kamala Harris. The state said the money will be used to compensate individuals employed by eBay or Intuit in California since 2005.

The largest payments, between $5,000 and $10,000, will go to about 40 people who worked for Intuit and were considered for, but not offered, a position at eBay, the state said.

The Justice Department and California sued eBay in 2012, alleging its agreement with Intuit reduced competition between the two tech companies for highly skilled workers, costing their employees opportunities for better jobs and higher pay.

EBay was the eighth tech company to settle Justice Department allegations of entering into anticompetitive "no- poach" hiring agreements with other employers. Intuit settled with the department in 2010, as did Google Inc., Apple Inc., Intel Corp., Adobe Systems Inc., Walt Disney Co.'s Pixar Animation unit and Lucasfilm Ltd., which has since been acquired by Disney.

Thursday's settlement "is one further step toward closing an unfortunate chapter for Silicon Valley and other companies who unlawfully agreed to deny their employees the opportunity to receive competing job offers," said Bill Baer, the Justice Department's antitrust chief.

EBay said it "continues to believe that the policy that prompted this lawsuit was acceptable and legal, and led to no anticompetitive effects in the talent market in which eBay competed." Any hiring practices that could have raised concerns with the Justice Department ceased years ago, the company said.

Hiring has become something of a competitive sport in Silicon Valley, with the most talented software engineers commanding skyrocketing salaries, particularly as companies' valuations continue to rise. The most-talented employees often are showered with perks to ensure they don't leave for competitors.

The Justice Department alleged that the no-poach agreement between eBay and Intuit began no later than 2006 and ran until at least 2009, involving executives at the highest level, including eBay's former chief executive Meg Whitman and Intuit's co-founder and executive-committee chairman Scott Cook, who has been an eBay board member since 1998.

In April, Google, Apple, Intel and Adobe agreed to settle a lawsuit brought by 64,000 employees who said their wages had been depressed because of agreements among those companies not to recruit one another's workers. The settlement was around $325 million, a person familiar with the terms told The Wall Street Journal last month.

Evidence in that case included emails among top executives like Apple's Steve Jobs and Google's Sergey Brin and Eric Schmidt conferring about hiring plans.

Lucasfilm, Pixar and Intuit settled private ligation last year for a combined $20 million.

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This article appears in: News Headlines

Referenced Stocks: AAPL , ADBE , EBAY , GOOG , GOOGL

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