Microsoft Policy May Jolt Temp Industry
A substantial number of the nearly 6,000 temporary workers at Microsoft Corp. face an uncertain future today because of a new policy that went into effect that limits the amount of time they can work at the company to 12 months.
The workers could be eligible for reemployment after taking a mandatory 100-day break. The move is driven, in large part, by a federal lawsuit filed by a group of longtime “temporary” employees, alleging the misuse of temporary workers.
Like Microsoft’s federal antitrust suit, its legal entanglements with temporary workers are also expected to have lasting implications for employers and the estimated 10.2 million American workers employed in temporary or contract jobs or as independent contractors, according to the Bureau of Labor Statistics.
Already, the effect of the software giant’s aggressive use of a contingent work force has hit many employees hard, revealing a sober side to one of the great economic success stories of the 20th century.
Deanna Christian, 52, was one of the first 300 employees hired at what was then a scrubby little software company. Over the next 17 years, she hired, trained and supervised several dozen employees who--with a little hard work and a lot of stock options--became millionaires and retired early.
Such a fate was not bestowed on Christian. Although Microsoft retained her editing skills for nearly two decades, it never made her a permanent employee. She finally left the software behemoth three months ago for a permanent job.
A single mother of three children, Christian paid her own health benefits--a cost she could rarely afford. She worried every day whether she would even have a job. And the loss of lucrative stock-option income just adds to the frustration.
“Whenever I hear about Bill’s [Gates] charitable giving, I think back to when I was a single mother and working full time at Microsoft without any health insurance,” Christian said. “It hurts. It really hurts. You just don’t call your employees ‘contractors’ forever and deny them the basic rights of other employees. That’s immoral.”
The effect of Microsoft’s decision will have ramifications throughout the high-tech industry. Microsoft and others such as Oracle Corp. and Sun Microsystems Inc. were among the first major companies to aggressively outsource or subcontract big percentages of their work. That created a highly contingent work force of part-timers, temps, contract workers and independent contractors.
In Santa Clara, the heart of Silicon Valley, the number of temporary workers has jumped to 42% of the work force this year from 19% in the 1980s, according to Working Partnerships USA, a union-affiliated group. Historically, Microsoft’s temporary workers have accounted for as much as one-third of its roughly 20,000-person work force in the Puget Sound area. In May, it stood at about 5,300.
“I think this is really about the future of employment relationships within the software industry,” said Marcus Courtney, co-founder of Washington Alliance of Technology Workers, or WashTech, a Seattle-based labor union. “What are the expectations for employees in this industry? Do we really want an industry where you work for a year and get laid off for 100 days?”
Microsoft spokesman Dan Leach said the temporary staffing agencies have been trying since March to minimize disruptions as well as make sure that the assignments are finished by the time some temporary workers are let go.
“We certainly are disappointed to take this step knowing that it may affect individuals who prefer temporary work options and have chosen multiple assignments at Microsoft over permanent employment at other organizations,” Leach said.
The bitterly fought lawsuit was first filed in 1992. A federal appeals court in May 1999 handed the temporary workers a partial victory, ruling that as many as 10,000 temporary Microsoft workers must be allowed to purchase company stock at a discount. Attorneys estimate that these workers could receive more than $100 million. The U.S. Supreme Court in January upheld the lower court’s ruling.
The 9th U.S. Circuit Court of Appeals said employers still have flexibility on pay, vacation and health-care issues, but said federal laws require that retirement benefits have to be the same for everyone.
That means that employees who worked at least half time, or about five months a year at Microsoft, are entitled to the money they lost by not being offered company stock at a discount as full-time workers were, the court ruled.
At issue in the future, however, is how this lawsuit may reshape the role of temporary workers everywhere.
Labor advocates say Microsoft and others are creating a two-tiered work force that misuses the words “temporary” and “independent contractor” to unfairly take advantage of some workers. Labor advocates contend that temporary workers should be employed at a business for six months or less.
“It’s really just another effort at creating the false appearance that these temporary workers are not Microsoft employees,” said David West, director of the Center for a Changing Work Force, a Seattle-based policy advocacy group. “It’s an improper way to try to exclude workers from the Microsoft benefit plan.”
At Microsoft, the exclusion goes beyond benefits and stock options. Temporary workers wear orange badges instead of the blue badges reserved for permanent employees--a difference that one temporary worker called the “mark of the beast.”
Temporary workers are prohibited from buying items at Microsoft’s company store. They are not permitted to use the company health club, play on the company baseball and soccer fields or allowed to attend company parties.
Temporary contract workers are hired as software testers, editors, technical writers, programmers, graphic designers, receptionists and office support staffers.
“Microsoft’s definition of ‘agency temporary’ includes a provision that these employees are very short-term, but that is not really how Microsoft uses its [temporary] employees,” said John Schussler, a temporary employee for nearly six years, in a court declaration. “Microsoft’s ‘temporary agency employees’ perform full-time, regular ongoing work for very lengthy periods of time just as recognized [permanent] employees do.”
Leach said Microsoft made some changes in its contracts with temporary agencies. The agencies now must offer health benefits to their workers, 13 days of paid vacation per year and a retirement plan.
“We absolutely appreciate the contribution of everybody who helps us create great products for our customers,” Leach said. “We do have 3,000 positions open for people who want full-time work.”
Philip Gaines, a temporary worker who lost his job Friday, is looking for permanent work. He spent 15 months at Microsoft indexing Web sites and customizing the results.
For his efforts, Gaines was paid about $35,000 a year, not enough money to support his wife and 4-year-old child. He can’t afford health benefits. He sublets his rental house to three other people to cover the monthly rent.
“I am a member of the working poor,” said Gaines, an English graduate from the University of Washington. “I expected to live in an uncertain situation. But it’s still exasperating. I’ve been living hand to mouth for a long time. I didn’t have the luxury to look elsewhere.”
Industry supporters say the use of a temporary work force has contributed to the growth of the high-tech industry. Staffing flexibility has allowed these companies to respond to short product cycles or to sudden changes in the marketplace.
“Many employees enjoy the temporary worker status. They are flexible, their skills are in demand, and some get paid very well,” said Harris Miller, president of the Information Technology Assn. of America, which represents high-tech companies. “From the employer’s view, there is a need to have a very flexible labor market. Projects come and go. Assignments come and go. In our mind, there is a pretty good match.”
Maria Roll, 31, worked as a managing editor for Microsoft Web sites for more than five years before quitting recently. Roll said she never wanted a permanent position and turned down several offers.
“For me, it was assessing the project and finding out who I would work with,” said Roll, who earned about $28 dollars an hour. “Those were the deciding factors for me. I was happy with the money.”
At the same time, Roll understands the frustration of many temporary workers at Microsoft. Managers hinted and even promised people that they would receive permanent offers, she said.
“Because of that,” Roll said, “a lot of people really took it to heart and believed it wholeheartedly.”
