Naval Engineers’ Wages Suppressed by No-Poach Agreements in Shipbuilding Industry, Class Action Claims

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A proposed class action claims two major U.S. military shipbuilders and several others in the naval engineering industry have cheated naval architects and marine engineers out of competitive wages by adhering to a long-standing, unwritten “gentlemen’s agreement” to not recruit, or “poach,” each other’s workers.

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According to the 75-page case, confidential witnesses have confirmed that each of the 19 named defendants have been tied to the so-called no-poach agreement, which has allegedly been in effect since at least the early 1980s, and expanded throughout the industry by at least 2000.

By refusing to actively recruit naval engineers from their competitors, the defendants have successfully stifled competition for these skilled workers and significantly suppressed their compensation, the filing claims.

Among the defendants in the case are General Dynamics and Huntington Ingalls Industries (HII), which operate the country’s only five shipyards used to build large warships. General Dynamics owns defendants Bath Iron Works, Electric Boat and NASSCO, and HII owns defendants Newport News Shipbuilding and Ingalls Shipbuilding, the suit says.

Also identified as defendants are mid-size shipbuilders Bollinger Shipyards and Marinette Marine, a recruiting agency known as Faststream Recruitment, and several specialized consulting firms focused on naval design and engineering—including Gibbs & Cox, JJMA/Serco, BMT Group, CSC/CACI, The Columbia Group, Thor Solutions, Tridentis, and a subsidiary business unit of Huntington Ingall, the complaint relays.

Per the case, the naval engineering industry’s “small, close-knit, geographically concentrated” nature—which the suit says witnesses have gone so far as to describe as “incestuous”—has helped the defendants monitor each other’s hiring practices and punish those who violate the alleged no-poach agreement.

According to a former project manager from one of the suspected conspiracy participants, firms that recruit another firm’s employees “don’t stay around that long because companies don’t want to work with them,” the filing relays.

In fact, many of the defendants’ former executives and managers have confirmed the existence of the unwritten “gentlemen’s agreement,” the case says. As the suit tells it, one industry veteran has “bluntly admitted” that his firm did not “go after people at other companies,” and another former insider from Huntington Ingalls said that the company maintained a “do not hire list” comprised of companies from which it would not poach naval engineers.

The complaint explains that in order to perform such highly specialized work, naval engineers must develop the necessary technical skills, gain considerable experience, and possess at least a bachelor’s degree in engineering, a security clearance and U.S. citizenship.

“In other industries, similarly specialized requirements generate cottage industries of recruiters whose full-time job is to convince skilled workers to leave their employers to accept substantially higher salaries with competitors,” the filing says.

Instead, the defendants primarily recruit recent college graduates and, to some extent, recently discharged military personnel, the complaint claims. Firms are permitted to hire a competitor’s employee only if they affirmatively reached out, although one witness stated that it’s difficult to find a higher salary by switching jobs since the competing naval engineering firms all seem to offer similar compensation, the suit alleges.

The result, the complaint argues, is that naval engineers receive “modest” annual raises and salaries “well below those of engineers with similar degrees of training and expertise in other industries.” The case contends that, overall, the defendants’ no-poach agreement has deprived these workers of hundreds of millions of dollars in compensation.

The lawsuit looks to represent any naval architects and marine engineers in the United States who have been employed by the defendants (except Faststream Recruitment), their predecessors, subsidiaries, and/or related entities at any time since January 1, 2000.

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