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Tech companies settle wages lawsuit for $325 million

Major tech companies including Apple, Adobe, Google and Intel have settled a huge class action lawsuit alleging they colluded not to go after each others’ employees, effectively holding down salaries. Alison Stewart talks with Arik Hessedahl of Re/code about the economic and social tensions troubling Silicon Valley.

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  • ALISON STEWART:

    Major Silicon Valley tech companies including Apple, Adobe, Google and Intel have settled a huge class action lawsuit alleging they colluded not to go after each others' employees, effectively holding down salaries. The settlement reportedly was for about $325 million. For more about this, we are joined by Arik Hesseldahl. He's a senior editor at Re/code.

  • ARIK HESSELDAHL:

    Exactly. What it ultimately did, these companies are always first to talk about how quickly they want to work in an unfettered marketplace and not have any extra regulation holding them down, and yet, you know, through this kind of, the evidence that's been shown so far at least showed that they colluded to not extend that same courtesy to their own employees. And the long-term effect was that it had the effect of holding down their salaries. And so, that is now, now the Justice Department was the one that first brought this to light. They brought an investigation in 2009, and they settled in 2010. So these companies have been arguing, have been operating under sort of a – I wouldn't call it a consent degree, but it's kind of an agreement without any financial penalties that they would not do this. There's no poaching policy is enforced. It expires in 2015, but what I think it's going to mean is that there may be some, may be some higher wages. I mean it's much more free work place, move between work places for these employees.

  • ALISON STEWART:

    This comes at an interesting time for Silicon Valley which has experienced a bit of a backlash. We've heard about the protests in front of the busses that ferry people to the various campuses of these big companies, reports about people having their 1500-hundred dollar Google Glasses ripped off of their faces, Smart Cars being overturned in California. It's what Wired magazine, an op-ed, I'm going to read this headline to you: "Silicon Valley Needs to Lose the Arrogance or Risk Destruction." Overstated or is it really a problem?

  • ARIK HESSELDAHL:

    There is a social moment. There is a big political moment. Sensitivities are very high. And I think that's another reason why these companies would probably rather settle and put this case to rest, and write a relatively small check. The appearances in light of this social and political moment that's occurring right now. The optics would have just been absolutely devastating. The fact that, you know, that they had this unwritten agreement to basically hold down salaries.

  • ALISON STEWART:

    When the CEOs are making so much money. And the companies are making so much money.

  • ARIK HESSELDAHL:

    Precisely. Precisely.

  • ALISON STEWART:

    Arik Hesseldahl from Re/Code. Thanks so much.

  • ARIK HESSELDAHL:

    You bet.

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