In the wake of a U.S Justice Department investigation into questionable hiring practices at tech companies, it’s come to light that in August 2007, Apple asked Palm not hire any of its employees.

According to former Palm CEO Ed Colligan, who once mocked Apple’s entry into the smartphone market, he and Jobs held talks in 2007 to discuss Palm’s recent hiring of former influential Apple executive Jon Rubenstein, who was instrumental in developing the iMac and the iPod. According to reports, Rubenstein was actively recruiting a number of Apple employees with offers to work for Palm, a move which infuriated Jobs, and rumor has it, once resulted in a shouting match between the two. According to reports, Rubenstein’s recruiting efforts prompted Jobs to remark, “We must do whatever we can to stop this.”

Obviously, Palm wasn’t interested in any non-hire agreement with Apple as a good number of former Apple engineers eventually migrated over to Palm where they helped churn out the Palm Pre.

While specific details of Jobs’ offer and discussion with Colligan aren’t known, Bloomberg’s review of the U.S Justice Department filings reveal that “Jobs said Apple had patents and more money than Palm if the companies ended up in a legal fight.”

Which is interesting, because it raises the question if Apple ever truly considered suing Palm for its use of multi-touch on the Palm Pre.

But back to Apple’s rebuffed proposal to Palm. Colligan responded to Jobs saying, “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.”

While the legality of such agreements aren’t entirely clear, the losers in such cases are the actual employees, who may potentially be prevented from moving on to more attractive jobs with higher pay.

Interestingly, this news comes hot on the heels that Apple and Google had a longstanding, albeit unofficial, agreement not to officially recruit each other’s employees, an agreement which may no longer exist in light of the departure of Google CEO Eric Schmidt from Apple’s board of directors.

It’s unclear if Jobs’ proposal to Palm was similar to its subsequent arrangement with Google, or if Jobs didn’t want Apple employees heading over to Palm under any circumstances, even if they sought out employment on their own volition.