Tuesday, February 14, 2006

The Microsoft Permatemps Fiasco

I recently became a beneficiary of what's known as the Microsoft Permatemp class action lawsuit. Basically, a number of people who worked at Microsoft on a contract basis over the years decided, "Hey, the stock has gone up tremendously, why don't we sue Microsoft to see if we can squeeze some money out of them, even though we signed contracts specifying that we aren't employees and aren't entitled to anything other than hourly wages".

When I worked at Microsoft, I worked on a contract basis, getting paid for each hour of work. This was clearly detailed in the papers I signed when starting work. The employees who got stock options and ESPP (employee stock purchase plan) were frequently there 60 to 80 hours a week. This was part of the deal - employees worked for salary, stock options and benefits, including the employee stock purchase plan. If the stock went up, they did well. Contractors worked for their hourly rate, period.

Yes, I got some cash out of the deal, but I certainly don't feel that it's money I deserve. And overall, it's been a huge net loss because now the job market is much more limited for contractors. Almost all large companies that hire lots of contractors now have a mandatory break period for contractors, to protect them against lawsuits. This mandatory break period means that after you work a year, you must take a certain amount of time off. At Microsoft, it's 90 days. What does this mean? Basically, if you enjoy the contractor lifestyle (flexible scheduling and vacations, less stress, high hourly rates) and want to continue being a contractor, you're screwed. You'll have to take 90 days unpaid leave after one year of work. Doesn't matter if it's mid-winter and you don't particularly want to be taking a vacation, you have to take leave anyway. Also, this usually this means that you'll need to be looking for another contract every year, since very few groups are able to have a potentially critical person gone that long.

How much did your average contractor make out of this deal? Anywhere from hundreds to potentially tens of thousands of dollars. And how much did the lawyers make out of it? A total of $27 million in attorney fees. This is our legal system at its worst.

For some more background, search on google for Microsoft Permatemp or check out this link


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