Former LG Employee Accuses LG, Samsung Of Driving Down Wages Through Non-Poaching Agreement


A former sales manager for LG Electronics in California has filed a lawsuit against his past employer and Samsung Electronics, over accusations that the two South Korean companies have a non-poaching agreement between them.

According to the lawsuit, which was filed last week in the U.S. District Court of San Francisco, the agreement involves the highest levels of the two companies.

The agreement between LG and Samsung not to recruit each other's employees in Silicon Valley has the effect of driving down employee wages and violates antitrust regulations, the lawsuit claims.

According to the plaintiff, identified as A. Frost, he learned of the non-poaching agreement between LG and Samsung back in 2013. That year, a recruiter contacted him through professional social network LinkedIn, as a position with Samsung is open for filling.

However, the recruiter got back to Frost on the same day.

"I made a mistake! I'm not supposed to poach LG for Samsung!!! Sorry! The two companies have an agreement that they won't steal each other's employees," the recruiter allegedly wrote to Frost.

It is "implausible" for such an arrangement between the U.S. divisions of the two companies to be reached without the knowledge and consent of their corporate parents in South Korea, the lawsuit notes, hence the claim that the top executives of LG and Samsung are involved in the non-poaching agreement.

The lawsuit is seeking class-action status in behalf of all the employees of LG and Samsung in California. No specific amount for damages has been stated in the filing.

Representatives for both companies have so far declined to issue a comment regarding the matter.

Joseph Saveri, the attorney representing Frost, said that such non-poaching agreements are anti-competitive, as employees should be fairly given the compensation that they deserve based on their talents and their worth to their company. With a non-poaching agreement, employees who are qualified to get a higher position and pay by moving into a company are prevented from doing so.

Saveri was also one of the attorneys who filed cases against Google, Apple, Intel and Adobe in a similar lawsuit that was settled early last year. The companies agreed to pay $415 million to former and current employees to settle the class-action lawsuit that accused them of being involved in an "overarching conspiracy" of blocking employee mobility and driving wages down.

Central to that case were emails sent between top-ranking executives of the companies, with one exchange involving late Apple founder Steve Jobs and then-Google CEO Eric Schmidt.

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