Apple may or may not be building a car to battle Tesla, but the tech giant is in trouble with A123 Systems for poaching the latter’s employees.
Autoblog reports the battery manufacturing is suing Apple in U.S. District Court in Massachusetts, seeking a restraining order preliminary injunction against former employee Mujeeb Ijaz, who it believes is hiring away key employees to the tech giant:
It appears that Apple, with the assistance of defendant Ijaz, is systematically hiring away A123’s high tech PhD and engineering employees, thereby effectively shutting down various projects/programs at A123.
The suit follows speculation that Apple is entering the automotive space with its own EV, with a roster of former Tesla employees likely working on the project.
Apple also hired Tesla’s lead recruiter: http://9to5mac.com/2015/02/19/apple-electric-car-team/
instead of suing, maybe A123 needs to start increasing some salaries and benefits for its’ employees.
But no it probably think its employees are slaves and how dare apple steal them.
There are emails between senior silicon valley managers at different companies asking for permission from each other to “poach” engineers so they can keep their wages suppressed.
I thought the whole “wage supress” thing was exclusive to the animation industry, guess not.
Apple, Google, and other large companies based in silicon valley agreed to a settlement in a class-action lawsuit regarding the wage suppression last year.
http ://appleinsider.com/articles/14/05/23/apple-others-officially-agree-to-325m-settlement-in-silicon-valley-wage-fixing-case
Regarding Ryoku75’s comment about the animation industry, the DOJ had their own investigation into essentially the same companies, plus Pixar, that reached a settlement in 2010 (presumably to avoid more severe anittrust penalties).
I’ve read up on that whole thing with the DOJ, its just nuts how widespread that stuff is.
Its hard for a small company to compete with a much larger company, especially when the larger company has the capital to pursue non core businesses out of pocket change and the smaller company only has its core business.
This is not the answer…..
There is no reasonable value to which A123 could raise engineers salaries to outbid Apple and at the same time maintain a sustainable business model.
Apple is selectively targeting a resource they deem valuable which, when carried out to this extent, beings to undermine the “host’ company. A hostile takeover.
Isn’t that what you call a free market for skilled labor?
Absolutely!
The best and smartest phone is nothing but a brick -and a lousy one- without a good battery.
An engineer with cutting-edge battery know how, is a valuable engineer.
According to Musk, Apple is poaching with 60% raises and $250,000 signing bonus. Maybe if A123 didn’t think of their employees as slaves, who should apparently be happy to get paid at all – their employees would be more loyal.
The suit is based on alleged violation of nondisclosure and noncompete agreements between the two companies, which isn’t mentioned in this truncated bit, but is mentioned in most other reports regarding this issue.
For those of you blaming A123, do you have *any* knowledge of salaries, benefits, and working environment at A123, or are you just spewing vitriol? I suspect the latter.
I’m sure A123 people are leaving because the benefits and pay are worse at Apple. Seriously?
Most likely Apple is offering the same deal to A123 folks at to Tesla folks 60% pay bump and $250,000 signing bonus.
“Elon Musk, founder of Tesla Motors, offers proof of that, claiming that Silicon Valley stalwart Apple has offered his employees whopping $250,000 signing bonuses and 60-percent pay increases.”
http://www.autoblog.com/2015/02/07/elon-musk-apple-hiring-tesla-workers/
o_O
“According to Musk, Apple is poaching with 60% raises and $250,000 signing bonus. Maybe if A123 didn’t think of their employees as slaves, who should apparently be happy to get paid at all – their employees would be more loyal.”
…..Still seems vitriolic… My annual salary isn’t even remotely as much as that signing bonus, so I would absolutely accept that offer. Does this mean my company treats me like a slave? Absolutely not. Maybe you should have taken into account that Apple has more money to throw around than basically anyone else?
“Does this mean my company treats me like a slave?”
If your company was paying you 50% of the current market rate and tried to sue to keep you from leaving (rather than match the current market rate), then yes.
Please share the data that shows A123 was paying engineers 1/2 of current market rate.
Or are you just pulling this out of where the sun don’t shine?
“Please share the data that shows A123 was paying engineers 1/2 of current market rate. ”
I did.
The market rate on that day was apparently +60% + a 250K bonus. Though, this likely doesn’t represent the norm for the industry as a whole. If they keep throwing that kind of money out, it could.
@ jmo
How does a quote from Elon Musk amount to proof that A123 pays employees half the “market rate”? The two companies aren’t even in the same market. A123’s automotive expertise is in Michigan, with cell testing in MA. Either of those markets pays significantly less than the silicon valley to start. In addition, companies with resources similar to Apple will pay in excess of market rates to recruit. So now you have an offer that exceeds the silicon valley market being compared to less expensive markets in MI and MA. Apple probably piles even more money on top of that as incentive for relocation.
Apple blowing away A123’s salaries and benefits does not mean A123 employees are treated as slaves.
“Apple blowing away A123’s salaries and benefits does not mean A123 employees are treated as slaves.”
It does if A123 sues to prevent them from quitting.
They aren’t threatening every employee with a lawsuit if they quit. The only former employee being sued is a high-level executive in a unique position to take a large portion of the talent with him.
The lawsuit against Ijaz may or may not have any merit, but don’t twist it into A123 taking every engineer that defects to court.
Honestly I have been to at least 3 separate tech sites and none of them mentioned it either
Noncompete agreements are generally illegal so I’m not sure what your point is. Apple just got in a lot of trouble over honoring them, so it’s ironic that they’re being dragged to court for not honoring them
Non-compete clauses on *individuals* as part of hiring agreements aren’t illegal, though they may be unenforceable.
They’re claiming, as far as I can tell from Autoblog’s shoddy “let’s link to tags in our site, not primary sources” reporting, that the guy Apple hired has a non-compete as part of his previous employment and HE’S violating it.
The law relating to employment contract non-competes varies from state to state, so you can’t make a blanket statement like that.
Whether a particular clause in a particular contract is enforceable or not, most individuals don’t have the means or the stomach engage in protracted litigation on the question, and most employers don’t want to be caught in the middle of a fight between a person and his former employer. Thus, even clauses that may well be unenforceable in law tend to be observed.
“The law relating to non compete varies from state to state”. Correct and IIRC in California they are pretty much unenforceable.
Not only are they unenforceable in California, they are illegal as far as I can tell. At least in the case of the five former employees identified as defendants, MI and MA law is more relevant.
I find this case interesting. It’s unfortunate for A123 that their business is being crippled by the loss of top engineers for reasons beyond their control (very few in silicon valley can and will outbid Apple, nevermind less expensive markets), yet it doesn’t seem like Apple has done anything wrong, ethically or legally.
Even if A123 wins, I’m not sure what they gain. An injunction against those five employees working for Apple for a period of six months, or one year tops? Either way those employees probably aren’t going back to A123.
Even where a non-compete may be unenforceable, it still gives the employer a powerful club.
Say, for example, Joe goes to work for Company A, and signs an employment agreement with a 2-year non-compete. We may all agree a court won’t uphold it.
But, when he gives notice that he’s leaving to join Company B, A tells him that he can’t work for them, because of his non-compete, and threatens to sue to enforce it.
B says “sorry, but come to us again when this is not an issue, and maybe we’ll have a job for you”. Joe’s choice is either to sue for a declaration that the non-compete is unlawful, which will cost him $50,000-$250,000 in legal fees and take at least 3 years, or to cave. Invariably, Joe caves.
I have seen companies write employment agreements with non-competes of up to 3 years, knowing that they are ultimately unenforceable, but secure in the knowledge that (i) the employee can’t afford the cost or length of a lawsuit, and (ii) no prospective employer wants to get embroiled in this sort of litigation. Which is certainly not fair, but is almost always correct.
Perhaps “right to work” is a double edged sword
For the fortunate few, it’s the right to GTFO and bring down the house, or at least cut it a few thousand times.
It’s not clear to me why A123 is suing Apple, other than going after deep pockets. Wouldn’t they instead be suing their ex-employees who violated non-disclosure agreements? I know that non-competes aren’t worth any more than the Charmin in the john, but NDA’s have some teeth.
Moreover, if the ex-employees were working under some type of employment contract, and they violated some contractual agreement regarding completing certain project work, wouldn’t A123 have a solid case against them?
Not a great precedent to go suing ex-employees who quit, but then, maybe the message needs to be sent so that people take contracts more seriously.
According to the article, a123 is not suing due to employee divulging of trade secrets specific to a123. They are suing because “they are losing employees that can shutdown their operations”
Sounds like sour grapes. A123 may or may not have a breach of contract suit, but that is with the former employees, not apple. One can’t sure because another company offers an employee and more promising offer. One can’t sue because one now apple employee knows who other good employees are at a123 and recruits them.
or do you think think companies should not recruit and only hire the jobless or those that apply?
I’m guessing the bankruptcy didn’t help A123’s case that much…
Once all the info is extracted from the X A123 employee Apple will dump them for cheaper engineers from China…… anyone want to bet on that one :=)
Apple profits per employee are $460,772, revenue per employee is $2.13 million. It’s unlikely to be worth it for Apple to outsource high stakes engineering jobs.
I doubt Apple would outsource those jobs to China. More likely those employees are being paid well above market rate, and they won’t see a raise until the rest of the market catches up.
It a great inspirational message to all your employees that if you dare leave for a better paying job that we will sue you.
A123: “Keep working for us, or we release the lawyers”
They aren’t suing the worker bees. Mujeeb Ijaz was a CTO.
It’s immaterial who or what an employee is/was. In America, any employee is free to pursue employment wherever they wish, unless under a “specified period of time contract” to their current employer.
That’s why it doesn’t make any sense to me that employees picket and strike for higher pay from their employer because if they were worth as much to that employer as they think they are, their employer would have paid them what they were worth to begin with.
I say kudos to Apple for hiring the best and the brightest!
And I also say kudos to Wal-Mart for raising the pay of those 500,000 employees that are worth more.
That’s what pay is all about: merit.
Apparently A123 is actually suing five former employees, not just Ijaz. Still worth noting that the suit is for violating non-disclosure, non-compete, and non-solicitation agreements.
The employees are free to seek employment elsewhere – as long as they don’t bring trade secrets with them while soliciting former coworkers in a position to do more of the same. At least that’s how A123 sees it. If we are lucky, maybe ttac has an employment lawyer reading this and can shed some light on whether these agreements are typically enforceable.
Non-disclosure and non-compete clauses are enforceable. When my wife’s dad sold the real estate portion of their business, a non-compete clause was included. We cannot compete with the new owners in any form or shape or appearance thereof.
But non-solicitation? I called our family and business lawyer, married to my wife’s youngest sister, and he said it all depended how it was written and what it was specifically applicable to.
Unless there is a contract that specified how long these employees were to remain wedded to the company, it would be difficult to find any recently-prudent individual to find for the plaintiff.
And as far as trade secrets are concerned, there are plenty of work-arounds that people come up with, once they identified the desired outcome, without infringing on proprietary trade secrets.
Such was the case in the early 1980s with the battle between the CP/M OS and MS-DOS, and whether the IBM PC and PC-AT called for proprietary protection in the battles of the 8086/8088, Motorola 64000, and other CPUs that ultimately provided the same results even though each got there a different way.
And lets not forget VHS vs Beta, or Apple vs Samsung today.
highdesertcat, the law distinguishes between non-competes made as a part of the sale of a business, and those made as part of an employment contract. The former are generally enforceable (so long as they’re reasonable), while the latter may or may not tbe enforceable (depending on a number of factors and the law of the state that governs them)
Non-disclosure agreements are also generally enforceable, but very difficult to prove.
I don’t know any of the specifics of the A123-Apple case, so I won’t comment on it. It is the case, though, that where Company A engages in a deliberate campaign to weaken or destroy Company B by hiring away key people and their knowledge, Company B can seek damages for unfair competition. Again, these are usually difficult cases to prove.
ect, thanks. That’s pretty much what my wife’s brother-in-law told me as well.
I didn’t want to regurgitate all that on this forum because someone would point out it has nothing to do with the premise that is ttac, or used to be ttac at one time.
I believe that the burden will remain with A123 to prove their case.
But from where I sit, I applaud Apple for hiring the best and brightest to further the profitability of Apple’s investors.
If A123 had been a viable business concept, they would not have gone belly-up. Apple is a winner and I believe “to the winner, all the spoils.”
lashes will continue until morale improves