'Perma-temp' ruling stands: Microsoft temps entitled to company stock

The U.S. Supreme Court yesterday rejected Microsoft Corp.'s appeal of a lower-court ruling that as many as 10,000 temporary workers should have been allowed to take part in the company's stock-option plan for permanent employees.

The Microsoft case is being closely watched by technology industry groups and legal observers because it could force companies to offer benefits to at least some of their temporary and contract workers -- a big issue in the world of information technology.

The Supreme Court justices didn't comment on their decision to let stand a ruling issued last spring by the 9th U.S. Circuit Court of Appeals in San Francisco that said Microsoft had to open its stock-purchase plan to temporary employees who worked at least five months in any 12-month period.

The lack of comment by the justices makes it hard to know whether they're entirely washing their hands of the matter, said Ken Dort, a partner at technology law firm Gordon & Glickson LLC in Chicago. But the decision dealt Microsoft a blow in a small but important part of the temporary-workers suit, he added.

The 9th Circuit Court's ruling only involved the number of temporary workers who might be eligible for the Microsoft stock option plan. The class action suit itself, first filed in 1992, still needs to go back to a trial court for a decision on its merits.

"This is all procedural jockeying," Dort said. "Nobody has decided whether Microsoft was right or wrong. All they've decided is how many people have the right to come after Microsoft."

But even that should be enough to push other companies -- and not just high-tech vendors -- to "look at their own practices to make sure they're not exposing themselves to the same kind of lawsuits," Dort said.

Harris Miller, president of the Information Technology Association of America (ITAA) in Arlington, Va., blasted the Supreme Court's decision in a statement.

"This is a 19th-century court making outdated decisions about a 21st-century workforce," Miller said. "A flexible workforce is the workforce of the new economy, and the Supreme Court's failure to recognize this creates uncertainty for [employers] and individual workers."

The ITAA, an IT industry trade association, had filed a friend-of-the-court brief supporting Microsoft's appeal of the 9th Circuit Court's ruling.

The trial judge in the case, which was originally filed in 1992, had limited the number of temporary workers who might be eligible for the Microsoft stock-option plan to several hundred people. But the 9th Circuit Court overturned that decision and sided with a claim by the plaintiffs that a much larger group of workers has legal standing in the case.

The plaintiffs attorney, Stephen Strong, estimates the number of temporary workers in the class to be between 6,000 and 10,000 people who have done work for Microsoft since 1987.

A Microsoft spokesman said the software vendor is "disappointed the (Supreme Court) has decided now is not the time to review the issues raised in the latest appeals court opinion." But he added that Microsoft doesn't expect the decision to have a big impact on the progress of the case, which has continued to be heard at U.S. District Court in Seattle while the company's appeal was being considered. Also still pending is a ruling in a separate suit addressing temporary employees' eligibility for health and retirement benefits.

Copyright © 2000 IDG Communications, Inc.

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