Updated: Apple, Google, Adobe and Intel agreed to settle on Thursday. 

If you have the brightest minds in an industry on your payroll, you obviously don’t want to lose them to competitors. But you probably don’t want to make your employees angry enough that they’ll bring an antitrust lawsuit against you.

Credit - Robert Scoble
Credit – Robert Scoble

That is where Silicon Valley darlings Apple, Google, Adobe, Intel, Intuit, Pixar and Lucasfilm find themselves as they are nearly a month away from class action trial. Employees who are seeking more than $3 billion in damages claim – explains employment lawyer Alden Parker and writer for The Labor and Employment Law Blog – that the

tech companies worked together from approximately 2005 to 2009 to negatively impact the pay of valuable employees by, among other things, agreeing not to actively recruit each other’s employees. The complaint seeks lost compensation and treble damages for the alleged antitrust violative employment practices … [and] states the tech companies formed agreements to (1) not recruit each other’s employees; (2) provide notification when making an offer to another’s employee (without the knowledge or consent of that employee); and (3) cap pay packages offered to prospective employees at the initial offer.

While the original lawsuits were filed in 2011, the current combined case has received quite a bit of media attention since tech bloggers wrote about how Apple and Google belonged a “wage-fixing cartel” that involved more companies than those being sued; Steve Jobs’ emails being used as evidence; and Facebook deciding not to like all of this.

This could be a very interesting television drama, and the plot thickens when you consider that the Department of Justice made the companies turned defendants stop entering into anti-poaching agreements as part of a 2010 settlement. The federal agency found that these agreements hurt competition and the chance for employees to find better jobs.

It’s likely that these tech giants will also settle the civil suit to avoid paying the $3 billion, which could buy you Oculus VR with change left over. The question remains, however, if this practice is illegal. In the state of California, where the case is taking place, the answer is maybe.

That isn’t an entirely pleasing answer, but labor lawyers Jason Starling and Jay Levine wrote in the Employer Law Report that

[w]hile companies may be able to enter into agreements with their employees restricting their ability to compete, entering  into agreements with competitors in an attempt to reach the same result may violate antitrust laws. On that point, an interesting facet of this case is that the companies involved were largely employing individuals in California. California state law prohibits non-competition agreements with employees,except if the agreement is part of the sale of a business.

No-hire agreements are not entirely legally or illegal. According to commercial litigator Robert Goldstein in the Trade Secrets & Noncompete Blog, anti-poaching provisions work if they are very narrowly defined.

Employers negotiating a no-hire provision in a settlement agreement or commercial contract can further minimize the risk of a successful antitrust challenge to a no-hire provision by observing a few basic principles … [including] no-hire provisions should not be drafted as standalone agreements …[and] the no-hire agreement should be as narrowly tailored as possible by limiting its scope to specific categories of employees.

Because of the big names involved in this case, it’s bound to receive more attention, and at the very least, it’s an example of how not to manage in-demand employees.