The online auction company eBay has settled a lawsuit with the U.S. Justice Department by agreeing to refrain from making deals with other technology companies to not poach employees, according to court papers filed on Thursday.
In the lawsuit, which was filed in 2012, eBay and the financial software company Intuit were accused of agreeing not to recruit each others' employees since before 2006, the Justice Department said in a news release.
The firm will pay $3.75 million to the Attorney General of California to "provide compensation to any potentially affected Californians who worked at eBay or Intuit since January 1, 2005, and will cover civil penalties, attorney's fees, and the cost of administering the settlement," eBay said in a statement.
Bill Baer, the assistant attorney general in charge of the department's antitrust division, pointed out the problems with poaching restrictions.
"eBay's agreement with Intuit served no purpose but to limit competition between the two firms for employees, distorting the labor market and causing employees to lose opportunities for better jobs and higher pay," said he said in the release. "The proposed settlement resolves the department's antitrust concerns and ensures that eBay will not engage in similar conduct in the future."
The proposed final agreement lasts for five years outside of a legal extension, court documents said.
In a statement, eBay said it believed the hiring policies behind the lawsuit were legal and did not affect competition in the talent market. The firm added that any concerns with the Department of Justice have ceased with Intuit's signing of a consent decree with the department in 2010.
The lawsuit, and similar legal issues involving other technology companies, highlight the intense competition for talent in Silicon Valley.
In this case, a "handshake'' agreement between eBay and Intuit came into place in 2006 and involved executives including then-eBay chief executive Meg Whitman and Intuit founder Scott Cook, according to court documents. At the time, Cook was serving on eBay's board and complained about eBay poaching Intuit employees.
Intuit was not named as a defendant because it was already part of a wide-ranging 2010 lawsuit that federal officials brought against six technology companies, including Apple and Google. Those companies settled.
—By CNBC.com with Reuters