Silicon Valley Wage Suppression Lawsuit

Kelly M. Dermody Lieff Cabraser Heimann & Bernstein  

Kelly M. Dermody
Lieff Cabraser Heimann & Bernstein


Tens of thousands of software engineers are currently suing Apple, Google, and a host of other companies in hopes of reclaiming wages they say the tech firms stole from them. As of April 22, 2014, over 64,000 plaintiffs had joined the class action. They are represented by Kelly Dermody. The engineers alleged that Steve Jobs from Apple, Eric Schmidt from Google, and others, put together an industry-wide moratorium on talent poaching and shared salary information.

The class action follows on a Department of Justice inquiry into industry practices, Dermody explained. The DOJ obtained settlements from the companies involved to stop the practices, but the settlements included no compensation to the employees. This lawsuit followed.

Dermody says that the arrangement began in the 1980s when Steve Jobs was involved with Pixar. Jobs and George Lucas agreed not to poach each other’s employees in order to prevent a “wage auction” in the animation industry. The allegation is that, when Jobs returned to Apple in the 1990s, he got the same agreement with Pixar that he had had with Lucas. According to Dermody, when Google came on the scene in the 2000s, Jobs pursued the arrangement with Eric Schmidt, and the agreement spread to other companies.

A settlement of the dispute has been made, but the parties have agreed to keep it confidential until it is presented to the District Court on May 27, 2014.

Some of the leaders of the technology companies in Silicon Valley have been somewhat insular and have not always paid attention to the rules that govern other industries. “There’s something about the culture of Silicon Valley that is different. . . . Some of the time folks in senior management believe their own press clippings” and don’t believe that the same rules apply to them, Dermody opined. This case has shed some light on the issues.

Kelly M. Dermody is a partner at Lieff Cabraser Heimann & Bernstein in San Francisco. Kelly is a passionate advocate and experienced litigator for the underdog who takes on corporations to end unfair and illegal business practices that hurt employees and consumers. The chair of Lieff Cabraser's employment practice group, Kelly is managing a high-profile class action lawsuit against Silicon Valley giants, including Apple, Google, and Intel, for alleged anti-competitive pacts that suppressed the wages of technical, creative, and other salaried employees.