According to EdibleApple, former Palm CEO recently claimed that in a 2007 meeting, Apple’s Steve Jobs proposed an unusual hiring freeze. The freeze would have prevented either company from hiring the other’s former employees.

Apple apparently wanted the agreement to prevent former employees from taking too much when they left. However, Apple wanted to go beyond the traditional legal protections available to protect a company’s secrets; true trade secrets can be protected by contractual agreements with the employees themselves. Instead, what Apple proposed would have prevented employees with any knowledge acquired at the company from working at rival Palm.

Apple CEO Steve Jobs

Apple CEO Steve Jobs

It is believed that Apple and Google had such an agreement at least at some point in the recent past. A TechCrunch report identified some discussions of the agreement by the companies; however, there is no official agreement. Sources indicate that the Apple-Google agreement may have only extended to approaching rival employees, not to accepting former rivals.

These agreements present a major problem because they could, depending on their secret terms, unfairly restrict an employee’s ability to work.

These restrictions go beyond simple non-disclosure or non-competition agreements. Major companies agreeing not to hire each other’s former employees reaches beyond protecting secret information or any of the policy goals of these contractual means of safeguarding one’s secrets. If a few industry leaders and major employers held to such a policy, it could leave their former employees with almost no options in their career field after leaving a company.

Non-competition and non-disclosure contracts are different, mainly because they are between employer and employee and generally are limited as to their enforceability. An agreement between companies not to hire would circumvent the courts’ goals in declaring overly restrictive contracts unenforceable–balancing protections for employee mobility and protections for a company’s secret products. However, under an inter-company agreement, the employees would be unlikely to find work with any other companies adhering to such an agreement. If a major player such as Apple used its weight to persuade others to accept these agreements, the future for a departing Apple employee could look very dismal.

The Department of Justice has been investigating questionable employment practices in the high tech industry for several years now. I’m sure the folks over at the DOJ will just be thrilled to see that (potential) collusion is still alive and well.

Brian Van Wyk

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One Response to Questionable Employment Practices in High Tech Industry

  1. RB says:

    Another example of this is when I tried to get a job at a rival at home customer service company. when they asked if I had done this type of work b4 and I said yes then “we don’t hire competitors workers” was the answer. go figure.