In 2010, Silicon Valley Employees filed a class-action lawsuit against Google, Adobe, Intel, Apple, and several other Silicon Valley firms alleging the companies explicitly agreed to ban the poaching of one another’s employees. Courts found this agreement unfairly limited competition in the job market and eventually led to the recent court-approved $415 million dollar preliminary settlement this March.
The Department of Justice considers this agreement between companies an unlawful trust due to its elimination of a significant type of competition in the economy. The ruling awarded damages in lost potential wages. The Silicon Valley firms believed they were fairly attempting to prevent losing their employees every time their back was turned.
For all business owners this lawsuit demonstrates just how widespread the debate surrounding employee poaching is. The talented employee pool is a limited resource in all regions, so as CEOs we all contend with this issue when hiring. For many, poaching is one solution to this scarcity.
Is Poaching Both Ethical and Legal?
The term poaching is misleading because it represents unethical behavior in other contexts of the word. However there is nothing unethical about a company offering a job to someone who is already employed without their current employer’s permission. No obligation exists to do so.
Employers don’t like poaching because they lose the employees they rely on most. As the saying goes, good help is hard to find, and every employee represents an investment made by the business that hired them. Employers don’t want to waste valuable time and money by training employees that are just going to go over to competitors and give them the advantage of getting those trained employees for free.
In the Silicon Valley case the CEOs aimed to curtail the use of poaching by one another within their group of firms. They collectively agreed to a no solicitation policy that stopped all communication between their employees and recruiters. The DOJ argued this ban unjustly barred a natural labor market. This ruling is further affirmation that employee poaching is a legal business practice.
Convincing a competitor’s employee to work for you by offering better pay, benefits, etc. is not illegal. Poaching only becomes illegal if an employee is hired to steal company trade secrets or conduct economic espionage on a rival firm. Doing either of these can result in civil or even criminal charges.
How to Keep Your Employees
Keep your employees dedicated by creating mutual respect between you and understanding their needs. You cannot prevent them from looking at other job offers, but helping talented employees reach their full potential and paying them fair compensation will help them commit to your company. Make your best employees part of the integral process to achieving your long-term business plans. By keeping them fully involved and well-supervised, you help to secure them against outside offers.