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DOJ Settles Non-Compete Matter with Silicon Valley Companies

Google denies that its non-solicitation agreement with other major competitors hindered fair movement in the workplace and open competition to secure skilled employees. Intuit voiced its agreement "to disagree with the DOJ on the issue of any wrongdoing in this matter."

The matter alluded to by Intuit and also involving - in addition to Google - such companies as Apple, Adobe and Pixar, was the mutual agreement of those companies to avoid cold calling the employees of each other regarding work opportunities. Google justified the practice by stating that it helped "maintain a good, working relationship" among the competitors, and Intuit added that the companies saw nothing wrong with the prohibition because it was not among "the types of broad non-solicit agreements" discouraged by the Department of Justice.

The DOJ disagreed with that assertion, saying that the settlement with the companies barring further constraints on cold calling "eliminated a significant form of competition to attract highly skilled employees." The DOJ had been taking a close look at hiring practices in high-tech Silicon Valley, and reached the settlement as part of its wider investigation.

The companies had together argued that the agreements among them were not unduly restrictive in that they were limited only to cold calling; other forms of recruitment - such as LinkedIn, employee referrals, job fairs and direct solicitations from competitors' employees - were not curtailed.

Still, the DOJ found the single restriction to be overly encompassing, stating that, because the agreements covered all employees and not just those in similar business lines, the ban on cold calls was "broader than reasonably necessary for any collaboration between the companies."

Related Resource: "DOJ settles no-recruit claims against tech companies" September 24, 2010

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