As Steve Jobs' reputation continues to sink, we receive word that the Apple boss tried to make a deal with Palm not to poach each other's employees. Palm rebuffed the suggestion as "likely illegal."

It doesn't surprise me that former Palm CEO Ed Colligan would turn Jobs down, even though communication between the two included an implied legal threat by Apple against Palm, Bloomberg reported.

“Your proposal that we agree that neither company will hire the other’s employees, regardless of the individual’s desires, is not only wrong, it is likely illegal,” Colligan said to Jobs last August, according to the news agency.

Colligan said he thought about Jobs’ proposal and considered offering hiring concessions, before deciding against it. Not surprising as Colligan is a good guy.

Jobs succeeded in making such an arrangement with Google, according to published reports. The feds are investigating and the Palm allegations only make Apple look worse.

It is disappointing, but hardly amazing, that Jobs would try to do something that shows such disrespect to the engineers and others who actually create the products he gets credit for.

The Palm discussion occurred after the company hired away Jon Rubenstein, a longtime Apple exec now credited with the smartphone strategy that resulted in the Palm Pre, released earlier this year.

“We must do whatever we can to stop this,” Jobs said in the communications, reported by Bloomberg.

Steve, there is an easy way to "stop this" that isn't nearly so likely to trigger a federal investigation: Stop treating your people like indentured servants. Treat them well, pay them what they are worth, and accept that even then some will want to leave for different, even greener pastures.

Trying to stop employees from talking jobs elsewhere is simply wrong and, as Ed Colligan warned, "likely illegal."

Jobs has already avoided the bullet in a scandal over backdated stock option grants, which put money in chosen employees pockets at the expense of shareholders.

With the Obama justice department and other federal regulators already looking closely at Apple over the iPhone and handset exclusivity and the sharing of board members, Jobs' alleged anti-poaching efforts only add to the fire that is growing around him.

It is always fun to watch supposed champions of free enterprise do their very best to squelch its magic and get caught. Also very sad.

Ve teran industry-watcher David Coursey tweets as @techinciter and can be contacted via his Web site.