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MS casts its ‘permatemps’ into outer darkness

Company refuses to back down before courts

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Analysis From tomorrow, new rules will go into effect for thousands of "permatemps" currently employed at Fort Redmond. After working for a year, they will have to "leave" for a hundred days before being allowed to return as temps, often to do the same work. The policy has been applied to all new temporary hires since last March. It may be the formal end of the permatemp phase, but it is not the end of the policy to have around 6,000 temporary Microsoft employees in the Seattle area.

There is of course an opportunity for other companies to recruit these permatemps as they complete their year's work and receive no income. Despite this downside, Microsoft is still not willing to change its policy, which was at first designed to save the company a great deal of money by excluding costly benefits from the permatemps, but is now costing Microsoft more, just so that it can save face.

We have obtained a copy of the Microsoft's confidential internal policy document for its own managers about the policy change. This clearly shows that Microsoft has no real intention to transfer most permatemps willingly to permanent employment:

"After careful consideration, it is now necessary to apply a limit to the person as well as the position, in order to ensure that temporary workers remain temporary. We regret that this will affect individuals who are choosing temporary work options, as well as create short-term disruption in workgroups.

"We have carefully considered this change and the ramifications. We are cognizant that this restricts the available pool of applicants to fill temporary positions, and we are very mindful of the present competitive marketplace. We are sympathetic to personal consequences for temporary workers, and yet after weighing our limited options in light of the emerging legal constraints, we have decided that we must address the problem of potential future liability and making this change at this time is a viable way of doing this."

What they'll say in public

This is the real policy. A later section of the policy document, labelled "talking points" sets out what managers can say to temporary employment agencies, and it is a quite different story, directly contradicting the real policy, which as we saw was: "to ensure that temporary workers remain temporary". Because the story is so flaky, the document counsels Microsoft managers: "You should be brief, using the talking points below...", and here are a couple of them:

"It is truly unfortunate that this policy will affect individuals who prefer temporary work options, and may otherwise have chose multiple assignments at Microsoft over another company. Because of recent litigation, the company has been left with limited choices.

"I will be making staffing plans for FY01 in the next few weeks, but I don't have anything definitive to communicate at this time. When I have a better forecast of our needs, I will be working with your agencies on what is planned for temporary assignments, and they can follow up with you."

Microsoft admits that the policy harms its development, but has decided that "winning" its legal battles is more important. The problem is, however, that it has been losing spectacularly. A looming problem that makes Microsoft quake is the possibility that the temporary workers, and at least some permanent staff, would join en masse the Washington Alliance of Technology Workers (affiliated with the Communications Workers of America, AFL-CIO) and introduce trade union activity to Microsoft.

Despite the National Labor Relations Act, which protects the right of employees to discuss salaries and working conditions, Microsoft has marked the files of permatemps who have been overheard discussing such matters as "ineligible" for further contract work with Microsoft.

Former CFO Greg Maffei was caught on video responding to a question at a meeting of the Institute of Management Accountants in Seattle last June, saying that "the quality of the temps is not as good as the quality of the full-time people". He also said of the permatemps: "We've set a hard rule - 364 days and these people are out. I don't care if they're rebuilding Windows 2000 by themselves, they are not going to work in this company." It was a very strong indication of the financial consequences to Microsoft of changing the status of permatemps to permanent workers. It was even sillier of Maffei to rant on: "There are nutty judges in the country... let's start with that premise," when referring to Court of Appeals judges who had ruled adversely on permatemp cases.

The employment conditions for the temps - who have to wear orange badges to distinguish them from blue-badged permanent employees - are strikingly different. Those with orange badges are not allowed to work in offices with windows, but they must use Windows of course. They cannot buy anything at Microsoft's company store on campus, or even go to Microsoft parties connected with products they have helped to develop. There was one amusing exception: the temporary employment agencies that Microsoft uses were told that they could co-sponsor something at the Windows 2000 launch, in which case the permatemp could come as "their" guest.

Company health insurance is denied, as are paid vacations, sick leave, pension plan benefits, share options, and the discount share purchase scheme. In a particularly mean move, Microsoft even prevented orange badgers from participating in the Take Our Daughters to Work Day. More recently, Microsoft has required the staffing agencies it uses to provide some lesser benefits, for legal reasons.

A separate but related employment issue is Microsoft's refusal to conform with Washington state law that guarantees employees access to their personnel files. Despite a decision earlier this year by the Washington State Department of Labor and Industries that Microsoft must grant workers access to their files, it has categorically refused to allow this in more than 100 instances. The state attorney general and the King County prosecutor are being urged to pursue misdemeanour charges against Microsoft for misdemeanours, but so far there is no action. Interesting factoid: Microsoft's general counsel Bill Neukom was once an unsuccessful Democrat candidate for the job of Washington state attorney general.

That familiar stalling tactic

Microsoft has twice lost in the Supreme Court when it appealed against permatemp decisions of the Ninth Circuit Court of Appeals, based in San Francisco. The Supremes refused to hear the case which concerned the right of permatemps to participate in the Microsoft stock purchase plan, but the justices did comment that the appellate decision had "far-reaching implications". It took ten years from the commencement of the case to the Supremes' decisions, and there still there has been no settlement because Microsoft's lawyers are using every possible legal stratagem to delay it.

The Court of Appeals decided that the permatemps were "common law Microsoft employees", and should have been allowed to buy Microsoft stock at a discount (as distinct from receiving stock options). It is estimated by the permatemps' lawyers that more than 10,000 of them will share a settlement of $100 million. It looks as though the cost to Microsoft will be at least as great as having hired the employees permanently in the first place. There is another scheduling conference about the issue in the district court next week.

Microsoft also tried to get another decision by the Court of Appeals overturned in which the permatemp employees sought health and pension benefits. Last June, Microsoft petitioned the Court of Appeals for the Ninth Circuit, but could not persuade even one of the 25 judges to ask for a vote on a rehearing. ®

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